Obama's Nominee for Securities and Exchange Commission a 'Victory for Financial Reformers'

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Obama's Nominee for Securities and Exchange Commission a 'Victory for Financial Reformers'

Nomination of Lisa Fairfax seen as 'a sign the tide is indeed turning.'

The U.S. Securities and Exchange Commission headquarters in Washington, D.C.  (Photo:  AgnosticPreachersKid via Wikimedia Commons)

President Barack Obama announced Tuesday that Lisa Fairfax was his Democratic choice for Commissioner on the Securities and Exchange Commission (SEC)—a nomination seen as a break from the revolving door between Wall street and financial regulators. 

David Dayen writes at The Intercept that the George Washington University law professor's nomination marks "a victory for financial reformers who want to lessen Wall Street’s influence on regulatory policy." He goes on to describe her choice as "an affirmation of [Mass. Senator Elizabeth] Warren’s strategy of making it difficult and painful for Obama to pick nominees with ties to Wall Street."

As the Wall Street Journal reports, Fairfax is "known for her expertise in shareholder activism, corporate governance and corporate securities. She has written a book titled 'Shareholder Democracy: A Primer on Shareholder Activism and Participation.'"

"Her name," Reuters reports, "surfaced as a contender in media reports earlier this year, after liberal groups pressured the White House not to hire a corporate lawyer who had previously worked to represent Wall Street."

That lawyer is Keir Gumbs, who, as Dayen contines, is "a corporate lawyer with the high-powered firm Covington & Burling, which represents numerous financial institutions." He continues:

Gumbs, a former SEC staffer, allegedly gave CEOs tutorials on how to avoid disclosing their corporate political spending while at Covington. He also represented the American Petroleum Institute before the SEC. He was seen as a corporate-friendly ally for Chair Mary Jo White, who would help marginalize the more reform-minded Democrat on the panel, Kara Stein. That’s why White lobbied to replace Aguilar with a moderate.

Adding background on his law firm, Yves Smith, author and founder of the blog Naked Capitalism, writes:

Yes, the very same Covington & Burling that gave us Lanny Breuer, who famously lay awake at night worrying if prosecuting banks might hurt them, and Gene Ludwig, the former Comptroller of the Currency who founded and leads Promontory Group, which among other things was behind the whitewashes of MF Global’s risk controls, Bank of America’s foreclosure reviews, and Standard Chartered’s claim that it had only $14 million (yes, with an “m”) bank wires that were out of compliance (as in used for money laundering) when it later admitted to $250 billion (yes, with a “b”).

Among those praising Fairfax's nomination is Wall Street watchdog group Better Markets.

"As the American people’s cop on the Wall Street beat, the SEC must prioritize investor protection and market integrity, not incumbent market participants’ preferences, profits and business models," stated Better Markets President and CEO Dennis Kelleher.

"As important, the SEC has to ramp up its enforcement program at the biggest, most dangerous securities firms and restore the rule of law and accountability on Wall Street," his statement continues. "By nominating Lisa Fairfax to serve on the SEC, President Obama has wisely chosen a substantive expert who understands the mission and importance of the agency. That’s exactly what the SEC needs as it works to restore investor and public confidence in our securities markets."

Adam Green, Progressive Change Campaign Committee (PCCC) co-founder, gave his nod of approval as well, stating, "It's encouraging that the White House selected Lisa Fairfax instead of a typical revolving-door Wall Street type. Senate Banking Committee members should ask tough questions and get solid commitments on issues such as shareholder approval of corporate political spending, bringing big banks to trial, and preventing Wall Street executives from looting their own companies at the expense of workers and investors."

Fairfax and Hester Peirce, Obama's pick for the Republican vacancy on the SEC, still need the confirmation of Congress.

"While it’s never over until the fat lady sings," Smith adds, "this looks like a real win for financial services reformers, and a sign the tide is indeed turning."

Confirmations for SEC candidates, PCCC's Green continues, should come only "if they are willing to challenge Wall Street power and fight hard for consumers."

And on Wednesday, the Democratic members of the Senate Banking Committee as well as the Republican former Chair of the Securities and Exchange Commission, William Donaldson, called on the nominees to support a rule requiring public companies to disclose their political spending. 

Consumer group U.S. Public Interest Research Group (PIRG) commended the announcement. 

"Following the infamous 2010 Citizens United decision, the past few elections have been flooded by corporate dark money and this secret spending creates real risks for investors who have no way to evaluate how corporations are spending their money. The SEC has a responsibility to protect investors and shed light on this spending," said Elise Orlick, Democracy Associate at U.S. PIRG.

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