Senator Elizabeth Warren (D-MA) “strongly urge[d]” President Obama to “immediately designate another SEC Commissioner as Chair of the agency.”
In her letter to the President, Senator Warren explained that “Chair White’s refusal to move forward on a political spending disclosure rule serves the narrow interests of powerful executives who would prefer to hide their expenditures of company money to advance their own personal ideologies.” Senator Warren highlighted Chair Mary Jo White’s “Disclosure Effectiveness Initiative” as part of her “anti-disclosure agenda” and charged that the SEC never has produced data to support Chair White’s presumption that investors experience “information overload.” She further noted that Chair White “has also refused to say how much time and agency resources have been spent on this voluntary initiative,” which Senator Warren had previously requested in a letter to Chair White. Senator Warren continued:
Giant public companies have every right to advocate for less transparency in public markets, whatever the broader economic consequences. But the SEC was not created to work for them. Under a new Chair, the agency can re-direct its limited discretionary resources away from actively undermining the interests of investors and back toward its core purposes.
Senator Warren also pointed out that, “[a]s of October 2016, the SEC has yet to finalize nineteen mandatory rules under the Dodd-Frank Act.”
Lofchie Comment: Senator Warren appears to take the view that financial regulation is but the continuation of politics by other means (paraphrasing Prussian strategist von Clausewitz). The attack on the SEC Chair is not the first shot fired by the Senator. She has launched a number of attacks on regulators and academics who have not aligned their views with hers. See, e.g., Senator Warren Asks CFTC to Withdraw EEMAC Report on Position Limits; Senator Warren Questions “Good Intentions” behind Study Challenging DOL’s Fiduciary Proposal.
The Senator’s latest missive follows closely upon the D.C. Circuit Court decision that the CFPB structure, which is commonly viewed as the Senator’s creation, is unconstitutional because the Director of the CFPB was immune from dismissal by the President. Yet now, the Senator calls for the SEC Chair to be fired because she has failed to follow “Congressional mandates.” To be consistent, the Senator should acknowledge that the CFPB’s original structure was inherently flawed in that it inappropriately insulated the agency from both Presidential and Congressional control. The President could remove the CFPB Director only “for cause.” Senator Warren seems to be arguing that SEC Chair White’s actions don’t amount to appropriate “cause” for removal, but are sufficient to designate an alternative Commissioner as Chair. Under the CFPB’s structure, that would not be possible, given that there is only one Director.
Senator Warren and her Congressional colleagues should revisit the CFPB’s design in toto, ideally replacing the single-director model with a five-person bipartisan model (i.e., similar to that of the SEC), and provide for Congressional control over the CPFB’s budget. Sauce for the goose (the SEC, the CFTC, and a host of other federal agencies) should be sauce for the gander (the CFPB).
As far as the Senator’s actual request, there is no possibility of it being granted. (Unsurprisingly, the White House indicated support for the SEC Chair.) If the President were to take the action that the Senator calls for, Chair White would resign, which would leave the SEC with only two Commissioners and, thus, the Democrats would lose their majority.