New SEC Head is a Fox

(10 am. – promoted by ek hornbeck)

Cross posted from The Stars Hollow Gazette

Pres. Barack Obama nominated former US Attorney of the Southern District of New York, Mary Jo White, to head the troubled Securities and Exchange Commission. The announcement comes a day after the damning PBS Fraontline expose of the Department of Justice’s failure to prosecute bank fraud and the resignation of Lanny Breuer, the head of the DOJ criminal division. Ms. White certainly has a fine reputation of being a tough prosecutor during her tenure as US Attorney, she managed something Rudi Guiliani failed to do, finally putting notorious mobster John “The Teflon Don” Gotti behind bars. However, in the 10 years since she left that office, Ms. White has worked diligently to protect the heads of the “Too Big To Fail” banks. In his Salon article, David Sirota called her a “Wall Street enabler” and goes on to enumerate the evidence:

Matt Taibbi, Rolling Stone contributing editor, in his article “Why Isn’t Wall Street in Jail,” recounts how during her tenure as head of litigation at the New York law firm Debevoise & Plimpton, Ms. White defended some very high profile bankers and played a key role in the “squelching of then-SEC investigator Gary Aguirre’s investigation into an insider trading incident involving future Morgan Stanley CEO John Mack

   The deal looked like a classic case of insider trading. But in the summer of 2005, when Aguirre told his boss he planned to interview Mack, things started getting weird. His boss told him the case wasn’t likely to fly, explaining that Mack had “powerful political connections.”…

   Aguirre also started to feel pressure from Morgan Stanley, which was in the process of trying to rehire Mack as CEO … It didn’t take long for Morgan Stanley to work its way up the SEC chain of command. Within three days, another of the firm’s lawyers, Mary Jo White, was on the phone with the SEC’s director of enforcement…

   Pause for a minute to take this in. Aguirre, an SEC foot soldier, is trying to interview a major Wall Street executive – not handcuff the guy or impound his yacht, mind you, just talk to him. In the course of doing so, he finds out that his target’s firm is being represented…by the former U.S. attorney overseeing Wall Street, who is going four levels over his head to speak directly to the chief of the SEC’s enforcement division…

   Aguirre didn’t stand a chance. A month after he complained to his supervisors that he was being blocked from interviewing Mack, he was summarily fired, without notice. The case against Mack was immediately dropped: all depositions canceled, no further subpoenas issued.

In February of 2012 on a panel at a New York University School of Law even, Ms White expressed her doubts about whether banks had committed crimes ahead of the financial crisis stating that care should be taken to “distinguish what is actually criminal and what is just mistaken behavior, what is even reckless risk-taking, and not bow to the frenzy.”

Another point of conflict is Ms. White’s husband. Yves Smith at naked capitalism notes that “John White, who headed the SEC’s corporate finance section under Chris Cox and was heavily involved in detailed Sarbanes Oxley rulemaking, and now that he is back at Cravath, has been lobbying against regulation.”

Nor does Ms. White have a background in finance or the “inner workings of the trading system:”

Although she has represented many executives accused of financial crimes, White is not an expert on the inner workings of trading systems, a lack of knowledge that may not serve her well as the SEC struggles to keep up with rapid changes in increasingly complex financial markets.

“The problem with the SEC is that they don’t seem to have a grip on” high-frequency trading and other major issues affecting modern financial markets, said Joe Saluzzi, co-head of equity trading at independent brokerage Themis Trading and a frequent critic of high-speed trading. “We’re concerned about cleaning up the market, and we need the SEC to take the lead here.”

Her background puts to question how aggressively White might prosecute financial fraud and enforce new rules under the Dodd-Frank financial reform law — most of which have not yet been adopted by the SEC.

Matt Taibbi recounts a conversation he had with a head fund manager regarding Ms. White’s:

His point about White is simple and it makes a lot of sense. She may very well at one time have been a tough prosecutor. But she dropped out and made the move a lot of regulators make – leaving government to make bucketloads of money working for the people she used to police. “That move, being a tough prosecutor, then going to work defending scumbags, you can only make that move once,” was his point. “You can’t go back again, you know what I mean?”

Think about it: how do you go back and sit in S.E.C.’s top spot after all of those years earning millions as a partner for a firm that represented Morgan Stanley, Bank of America, Goldman, Sachs, Deutsche, Chase, and AIG, among others? Think that fact that his firm has retained her firm has anything to do with Jamie Dimon coming out and saying that White is the “perfect choice” to run the S.E.C.? Think of all the things she knows but can’t act upon. Could she really turn around and target Morgan Stanley after being their lawyer for all those years?

Ms. White is not only another example of the government’s revolving door from public service to private practice back to public service but of Pres. Obama’s signal to Wall Street that they are safe to continue with business as usual. Mary Jo White is the fox in the hen house.  


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    • TMC on February 1, 2013 at 19:03
  1. Hog-nosed skunk causes stir at Grand Canyon

    Conepatus leuconotus (American Hognosed Skunk)

    is “least concerned” threatened.

    I had more concern for the endangered Massasauga Rattlesnake that was threatened with extinction by spraying the Cicero Swamp near Syracuse years ago.  

    A very courageous fellow appeared at a hearing on the matter to save the rattler.  The spraying was proposed to kill the mosquitoes spreading equine encephalitis that had killed two little girls and numerous horses.  

    As you probably guessed, the committee decided little girls and horses were more worth saving than a rattlesnake.

    Obama may become a wonderful ex-president, like Jimmy Carter who gave us the misery index with his economic adventurism and proposed to save us all with corn ethanol and rooftop solar energy, two of the least effective and highest-priced forms of renewable energy.

    Both are very decent, highly moral men cursed with atrocious judgment IMO – the reverse of Richard Nixon.

    Makes no sense but then all humans are flat earthers while the the quickest and shortes traveling around the world is to take great circle routes instead of straight lines.

    Best,  Terry

    • banger on February 6, 2013 at 18:30

    There has to be some kind of counter-pressure to the Wall Street oligarchs for them to be brought to account. There isn’t that pressure so Obama has no choice but to select someone who will represent Wall Street interests–they have power and they know how to use it.

    Again, this all goes back to the refusal of the left to organize and understand that politics is not a matter of competing sermons but the application of force.

    I’ve gone through my rap too many times to bother with it anymore–all I can say is that there is no hope for any move towards dis-empowering the current oligarchical set-up because there is no effective opposition other than the usual pro-wrestling-style displays of opposition.

    Again, the dramatic and complete failure of the Occupy movement to create a permanent movement is an example of all the deep faults within the left in America–no organization, no ideology, no philosophy only righteous indignation and “outrage” that is bootless in the political arena.

    The only virtue that the left has is that it keeps up the information–we at least have an idea of what is actually going on–perhaps generations to come will learn the art of politics.

    • TMC on February 6, 2013 at 21:13

    on Mary Jo White’s nomination.

    Yves Smith at naked capitalism writes:

    Occupy the SEC has released one of its characteristically well-though-out and documented letters, in the form of questions it would like to see raised during the Senate hearings on the nomination of Mary Jo White to head the SEC.

    Occupy the SEC Questions for Mary Jo White Confirmation Hearing

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