Warren to SEC Chair: “Step Up” (Or Step Down)

[Autumn]

Sen. Elizabeth Warren on Tuesday released a blistering 13-page letter to Securities and Exchange Commission chair Mary Jo White, calling out her “extremely disappointing” leadership of what should be the chief cop on the financial beat, accusing her of “broken promises” and telling her to “step up.”


Broken Promises on CEO-Worker Pay

White has repeatedly promised and repeatedly failed to finalize regulations requiring corporations to report the ratio of CEO pay to that of their median workers, as mandated by Dodd-Frank. White even apparently lied to Warren’s face, promising in a private meeting that the regulations would be out this fall without fail, even as the SEC was announcing a calendar that projected release for next spring.

This is a big deal. Soaring CEO pay is central to the extreme inequality in America. Worse, perverse compensation policies give CEOs multimillion-dollar personal incentives to plunder their own companies. The bulk of their pay comes from bonuses predicated on short-term stock returns. So CEOs press to meet market “expectations,” merging, taking on debt, purging workers, slashing R&D, buying back stocks to lift prices – all designed to lift the stock price and pad their bonuses. Repeatedly they sacrifice the company’s long-term interests for short-term returns. By the time the damage surfaces, the CEO has already moved on.

Publication of CEO-worker ratios, therefore, is an important first step. It gives investors a clear measure of the health of the company. It gives activists and stockholders a measure to challenge excessive compensation packages.

That is exactly why CEOs have fought fiercely to delay issuance of the rules, while working with Republican legislators to repeal it. The repeated delays in issuing the rule are inexcusable, suggesting that White is tacitly conspiring with that effort.

[merrily]

1. Mary Jo White

From her wiki:

For 10 years, she was chair of the litigation department at Debevoise & Plimpton.[8]* The Huffington Post called her "a well-respected attorney who won high-profile cases against mobsters, terrorists and financial fraudsters over the course of nearly a decade as the U.S. attorney for Manhattan."[9]

It has been asserted in Rolling Stone magazine that, among other duties at Debevoise, White has used her influence and connections to protect certain Wall Street CEOs from prosecution,[10] including a notable case involving the firing of Gary J. Aguirre for investigations into the CEO of Morgan Stanley executive John J. Mack.

In 2013, she was involved in the prosecution of Aaron Swartz as lawyer for JSTOR, where she asked the lead prosecutor to drop the charges.[11]

When White started at the SEC in April 2013, most of the agency's enforcement cases from the 2008-2009 financial crisis were either settled or near completion, freeing up resources for other work.[12] In a shift for the agency, White announced in June 2013 the SEC would start demanding more admissions of misconduct as part of an enforcement settlement.[13] In an October 2013 speech, White announced a new SEC enforcement tactic practiced by neighborhood beat police to root out crime. In her speech, White cited a March 1982 Atlantic article that theorized enforcing small, petty crimes - like smashed windows - can prevent bigger crimes. Focusing enforcement attention to these small crimes avoids breeding an environment of indifference to the rules, White said. During her tenure, White has had to recuse herself from some of the SEC's biggest enforcement cases as a result of her prior work at Debevoise and her husband, John W. White, a lawyer at Cravath, Swaine & Moore.*[14]

*very prestigious Wall Street law firm.

http://en.wikipedia.org/wiki/Debevoise_%26_Plimpton
http://en.wikipedia.org/wiki/Cravath,_Swaine_%26_Moore

Her political party is listed as Independent and she was also a Clinton appointee