‘I Am Disappointed': Elizabeth Warren Blasts Top Financial Industry Overseer For Failing The Public

BY ALAN PYKE
POSTED ON JUNE 2, 2015 AT 1:22 PM
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Securities and Exchange Commission (SEC) head Mary Jo White is under renewed scrutiny Tuesday after Sen. Elizabeth Warren (D-MA) published a blistering 13-page letter to the commissioner listing the various ways in which she says White has failed to keep her promises to Warren and other senators since being sworn in in the spring of 2013.
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“You have now been SEC Chair for over two years,” Warren’s letter says, “and to date, your leadership of the Commission has been extremely disappointing.”
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Warren’s many criticisms fall into two primary categories. Most of them involve how the SEC enforces existing rules. Warren also offers stiff feedback on White’s influence on the agency’s work writing new regulations for corporate America.
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When other agencies have taken a tough line over financial lawbreaking, Warren writes, White has played the good cop, slipping the crooks a care package to limit the fallout from their misdeeds. The SEC grants a special status to certain large, long-tenured firms that allows them to speed up their work by reducing their regulatory compliance requirements. When a company on that list breaks the law, it’s supposed to lose its special privileges. Such companies can apply for a waiver to stay off the naughty list. White had indicated publicly that she wanted to toughen the agency’s approach to waiver requests in cases where they might “‘soften’ the impact of an enforcement action.”
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But that’s exactly what the SEC decided to do when the Department of Justice forced several of the largest banks in the world to plead guilty to felony charges in May. Even though JP Morgan, Royal Bank of Scotland, Citigroup, and Barclays all admitted to criminally rigging currency exchange rates at the expense of clients and other investors, White’s SEC decided to spare the four banks on the list from increased regulatory scrutiny going forward. Since the fines levied against the banks were far too small to meaningfully dent their bottom lines, the SEC waivers arguably gutted the most meaningfully punitive consequences the felonious banks would’ve faced.
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One commissioner named Kara Stein blasted the White-led agency’s decision publicly. Stein called the banks recidivists who have requested and received numerous SEC waivers in recent years despite repeated instances of misconduct. Progressive activist group Credo has asked President Obama to appoint two more SEC commissioners who share Stein’s more aggressive mindset toward the job. White has reportedly clashed so much with Stein internally that the latter commissioner does not allow White’s chief of staff into her office.
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Warren’s letter blasts White for going back on her “strong words” on waivers by granting more than half of the total requests she’s fielded, even in criminal cases. The agency had not granted a waiver in a criminal case since 2005 prior to White’s appointment, the letter says.
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Anger over a similar disconnect between White’s public proclamations and official actions animates Warren’s other complaints as well. She accuses White of failing to live up to her public promises to reduce the commission’s use of “neither admit nor deny” language in settlements of securities violations. The letter also notes a contrast between White’s comments downplaying concerns about her prior work defending Wall Street companies and the actual impact her conflicts of interest have had on the SEC’s work. White’s recusals in cases involving either her own former clients or her husband’s current clients have “raised the specter that companies might seek to hire your husband’s firm to ‘neutralize’ you,” Warren wrote.

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