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<H1 class=article-headline>Obama’s SEC Cop-Out</H1>
<P class=article-deck><FONT size=4><STRONG>The new chair of the Securities and
Exchange Commission is fresh off Wall Street.</STRONG></FONT></P><SPAN
class=author><FONT size=4><STRONG>BY </STRONG></FONT><A
href="http://inthesetimes.com/community/profile/10"><FONT size=4><STRONG>Joel
Bleifuss</STRONG></FONT></A></SPAN><FONT size=4><STRONG> </STRONG></FONT>
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<DIV class=tweetmemeBtn><FONT size=4><STRONG>When nominating White, Obama
promised that she will be a 'cop on the beat.' But who on her beat will she
'serve and protect'?</STRONG></FONT></DIV></DIV>
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<P><FONT size=4><STRONG>Mary Jo White, confirmed April 8 as President Barack
Obama’s choice for chair of the Securities and Exchange Commission
(</STRONG></FONT><A href="http://www.sec.gov/"><FONT
size=4><STRONG>SEC</STRONG></FONT></A><FONT size=4><STRONG>), has a wealth of
experience—and a pile of wealth. From 2002 to 2013, White was the head of
litigation at Debevoise & Plimpton, where her clients included the likes of
UBS, JPMorgan Chase and Morgan Stanley. Servicing the legal needs of bankers has
been good to White and her husband John, also a partner of an industry-friendly
firm. </STRONG></FONT><A
href="http://www.bloomberg.com/news/2013-02-08/sec-nominee-white-s-disclosure-report-shows-possible-conflicts.html"><FONT
size=4><STRONG>Bloomberg reports</STRONG></FONT></A><FONT size=4><STRONG> the
Whites’ financial disclosure forms show they own “assets valued between $9.9
million and $41 million.”</STRONG></FONT></P>
<P><FONT size=4><STRONG>In March, White’s nomination sailed through the Senate
Banking Committee </STRONG></FONT><A
href="http://www.politico.com/story/2013/03/richard-cordray-mary-jo-white-nominations-approved-senate-banking-panel-89070.html"><FONT
size=4><STRONG>21 to one</STRONG></FONT></A><FONT size=4><STRONG>. Lone
dissenter Sen. Sherrod Brown (D-Ohio) voiced concern about “Washington’s
long-held bias toward Wall Street and its inability to find watchdogs outside of
the very industry that they are meant to police.”</STRONG></FONT></P>
<P><FONT size=4><STRONG>When nominating White, Obama promised that she will be a
“</STRONG></FONT><A
href="http://www.bloomberg.com/news/2013-02-08/sec-nominee-white-s-disclosure-report-shows-possible-conflicts.html"><FONT
size=4><STRONG>cop on the beat</STRONG></FONT></A><FONT size=4><STRONG>.” Yeah,
but who on her beat will she “serve and protect”?</STRONG></FONT></P>
<P><FONT size=4><STRONG>Ka-ching! Now we know.</STRONG></FONT></P>
<P><FONT size=4><STRONG>On May 1, in her </STRONG></FONT><A
href="http://www.sec.gov/news/press/2013/2013-77.htm"><FONT size=4><STRONG>first
SEC vote</STRONG></FONT></A><FONT size=4><STRONG>, White shepherded through a
proposal that would allow foreign branches of American banks to ignore DoddFrank
financial reform regulations that </STRONG></FONT><A
href="http://www.nytimes.com/2013/05/01/business/banks-criticize-strict-controls-for-foreign-bets.html?pagewanted=all"><FONT
size=4><STRONG>control</STRONG></FONT></A><FONT size=4><STRONG> the $700
trillion derivatives market. Instead, U.S. banks would be free to trade
derivatives under the rules of host countries where regulations are weak or
nonexistent.</STRONG></FONT></P>
<P><FONT size=4><STRONG>Been there. Done that. The </STRONG></FONT><A
href="http://fcic.law.stanford.edu/"><FONT size=4><STRONG>Financial Crisis
Inquiry Commission</STRONG></FONT></A><FONT size=4><STRONG>, which investigated
the 2008 financial crisis, </STRONG></FONT><A
href="http://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf"><FONT
size=4><STRONG>concluded</STRONG></FONT></A><FONT size=4><STRONG>: “The
enactment of legislation in 2000 to ban the regulation by both the federal and
state governments of over-the-counter derivatives was a key turning point in the
march toward the financial crisis.”</STRONG></FONT></P>
<P><FONT size=4><STRONG>In a </STRONG></FONT><A
href="http://www.nytimes.com/2013/05/06/opinion/a-disappointing-debut-at-the-sec.html"><FONT
size=4><STRONG>May 5 editorial</STRONG></FONT></A><FONT size=4><STRONG>, the
<EM>New York Times</EM> lamented the fact that White’s first act as SEC chair
“could leave investors and taxpayers exposed to the ravages of reckless bank
trading.” Indeed, out-of-control bankers pose a clear and present danger. As
Attorney General Eric H. Holder Jr. </STRONG></FONT><A
href="http://dealbook.nytimes.com/2013/03/11/big-banks-go-wrong-but-pay-a-little-price/"><FONT
size=4><STRONG>explained</STRONG></FONT></A><FONT size=4><STRONG> on March 6,
the Justice Department may choose not to pursue cases against big banks because
filing criminal charges could “have a negative impact on the national
economy.”</STRONG></FONT></P>
<P><FONT size=4><STRONG>To that end, Sen. Bernie Sanders (I-Vt.) and Rep. Brad
Sherman (D-Calif.) have </STRONG></FONT><A
href="http://thomas.loc.gov/cgi-bin/query"><FONT
size=4><STRONG>introduced</STRONG></FONT></A><FONT size=4><STRONG>
</STRONG></FONT><A
href="http://www.sanders.senate.gov/imo/media/doc/GRA13102.pdf"><FONT
size=4><STRONG>legislation</STRONG></FONT></A><FONT size=4><STRONG> that would
give the </STRONG></FONT><A href="http://www.treasury.gov/"><FONT
size=4><STRONG>Treasury Department</STRONG></FONT></A><FONT size=4><STRONG> 90
days to identify commercial banks, investment banks, hedge funds and insurance
companies whose “failure would have a catastrophic effect on the stability of
either the financial system or the United States economy.” Treasury would then
be required to break up those institutions.</STRONG></FONT></P>
<P><FONT size=4><STRONG>“We have a situation now where Wall Street banks are not
only too big to fail, they are too big to jail,” Sanders </STRONG></FONT><A
href="http://www.sanders.senate.gov/newsroom/news/?id=2394f29d-8a62-4d90-8314-971f8eb9753b"><FONT
size=4><STRONG>said</STRONG></FONT></A><FONT size=4><STRONG> in announcing the
legislation. “No single financial institution should have holdings so extensive
that its failure could send the world economy into crisis. … If an institution
is too big to fail, it is too big to exist.”</STRONG></FONT></P>
<P><FONT size=4><STRONG>White’s SEC lacks the regulatory backbone to protect the
public from financial schemers. It behooves citizens to get behind the
SandersSherman bill and break the banking industry into units small enough so
that if one were to fail, it would be but a fart in the
wind.</STRONG></FONT></P></DIV></FONT></DIV></BODY></HTML>