Senator Warren Lets Loose on SEC Chair White
Commentary by Steven Lofchie
Massachusetts Senator Elizabeth Warren issued a public letter blasting SEC Chair White for a variety of asserted failings, including (i) not finalizing the rule required by Dodd-Frank that requires issuers to disclose the ratio of a CEO's pay to that of the median worker, (ii) granting waivers from various securities law violations for firms that have been sanctioned for various violations, (iii) settling cases without requiring the settling party to plead guilty; and (iv) being required to recuse herself from numerous cases because of her prior employment at a "Wall Street defense firm" and her "husband's ongoing employment" at another such firm. In addition, Senator Warren strongly suggested that Chair White had lied to her, providing "misleading information" as to the CEO pay disclosure rule.
In response to Senator Warren's remarks, Chair White issued a statement (quoted in the Boston Globe and other newspapers) as follows:
"I am very proud of the agency's achievements under my leadership, including our record year in enforcement and the Commission's efforts in advancing more than 30 congressionally mandated rulemakings and other transformative policy initiatives to protect investors and strengthen our markets. Senator Warren's mischaracterization of my statements and the agency's accomplishments is unfortunate, but it will not detract from the work we have done, and will continue to do, on behalf of investors."
Commentary
Wow! Or Whoa? Give it a read. Senator Warren's attack on Chair White is vicious, particularly given the fact some of the Senator's criticisms (for example, as to Chair White recusing herself) are easily rebutted. Even where Senator Warren could reasonably disagree with Chair White (for example, on the matter of whether accused parties should be required to plead guilty as a condition to settling a case), Chair White's position is likewise completely reasonable (i.e., the SEC must conserve its limited resources and not waste them on forcing guilty pleas).
It is clear that Senator Warren believes that punishment imposed on "bankers" is always too light and that regulations imposed on transactions always have too many loopholes. The question that Senator Warren's beliefs raise is not whether they are correct – she is entitled to her opinions and they are consistent. The real question is when will the dialogue around financial regulation become less partisan and more objective – what works, what seemed like a good idea at the time but failed, what isn't worth the bother, what remains to be done? The economy and the financial system cannot recover and expand in the absence of serious dialogue between those who work in the government and those who live under it.