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DealBook: Choice for S.E.C. Is Ex-Prosecutor, in Signal to Wall St.

January 24, 2013 by Leave a Comment

President Obama with Mary Jo White and Richard Cordray.Doug Mills/The New York TimesPresident Obama with Mary Jo White and Richard Cordray.

3:30 p.m. | Updated

President Obama announced Thursday his nomination of Mary Jo White, a former federal prosecutor turned white-collar defense lawyer, to be the next chairwoman of the Securities and Exchange Commission.

In a short ceremony at the White House, Mr. Obama also said he was renominating Richard Cordray as director of the Consumer Financial Protection Bureau, a post Mr. Cordray has held under a temporary recess appointment without Senate approval for the past year. The president portrayed both selections as a way of preventing a financial crash like the one he inherited four years ago.

“It’s not enough to change the law,” Mr. Obama said. “We also need cops on the beat to enforce the law.”

Mr. Obama noted that Ms. White was a childhood fan of “The Hardy Boys,” just as he was. He added that as the United States attorney in New York in the 1990s she “built a career the Hardy Boys could only dream of.”

He noted that she prosecuted money launderers, mobsters and terrorists. “I’d say that’s a pretty good run,” he said. “You don’t want to mess with Mary Jo. As one former S.E.C. chairman said, Mary Jo does not intimidate easily.”

Mr. Obama likewise pressed the Senate to finally confirm Mr. Cordray to the leadership of the consumer agency created by the Wall Street regulation law passed in 2010. The president installed Mr. Cordray as director last January without Senate approval using his recess appointment power, but his term will expire at the end of the year unless he wins approval from the upper chamber of Congress.

“Financial institutions have plenty of lobbyists looking out for their interests,” Mr. Obama said. “The American people need Richard to keep standing up for them. And there’s absolutely no excuse for the Senate to wait any longer to confirm him.”

Ms. White and Mr. Cordray spoke only briefly. Ms. White said if confirmed she would work “to protect investors and to ensure the strength, efficiency and the transparency of our capital markets.” Mr. Cordray said that during his short tenure he has “been focused on making consumer finance markets work better for the American people” and approached it “with open minds, open ears and great determination.”

Regulatory chiefs are often market experts or academics. But Ms. White spent nearly a decade as the United States attorney in New York, the first woman named to this post. Among her prominent cases, she oversaw the prosecution of the mafia boss John Gotti as well as the people responsible for the 1993 World Trade Center bombing. She is now working the other side, defending Wall Street firms and executives as a partner at Debevoise Plimpton.

As the attorney general of Ohio, Mr. Cordray made a name for himself suing Wall Street companies in the wake of the financial crisis. He undertook a series of prominent lawsuits against big names in the finance world, including Bank of America and the American International Group.

The White House expects Ms. White, 65, and Mr. Cordray, 53, to draw on their prosecutorial backgrounds while carrying out a broad regulatory agenda under the Dodd-Frank Act. Congress enacted the law, which mandates a regulatory overhaul, in response to the 2008 financial crisis.

Jay Carney, the White House press secretary, said Ms. White has “an incredibly impressive resume” and that her appointment along with the renomination of Mr. Cordray sends an important signal.

“The president believes that appointment and the renomination he’s making today demonstrate the commitment he has to carrying out Wall Street reform, making sure we have the rules of the road that are necessary and that are being enforced in a way” to avoid a crisis like that of 2008, Mr. Carney said.

Another White House official added that Ms. White and Mr. Cordray will “serve in top enforcement roles” in part so that “Wall Street is held accountable and middle-class Americans never again are harmed by the abuses of a few.”

Ms. White will succeed Elisse B. Walter, a longtime S.E.C. official, who took over as chairwoman after Mary L. Schapiro stepped down as the agency’s leader in December. Mr. Cordray joined the consumer bureau in 2011 as its enforcement director.

The nominations could face a mixed reception in Congress. Republicans had previously vowed to block any candidate for the consumer bureau, leading to the recess appointment. It is unclear whether the White House and Mr. Cordray will face another standoff the second time around.

Mr. Carney argued that there were no substantive objections to Mr. Cordray’s confirmation, only political ones. “He is absolutely the right person for the job,” Mr. Carney said.

Ms. White is expected to receive broader support on Capitol Hill. Senator Charles E. Schumer, a New York Democrat, declared that Ms. White was a “tough-as-nails prosecutor” who “will not shy away from enforcing the laws to ensure that markets operate fairly.”

But she could face questions about her command of arcane financial minutiae. She was a director of the Nasdaq stock market, but has otherwise built her career on the law-and-order side of the securities industry.

People close to the S.E.C. note, however, that her husband, John W. White, is a veteran of the agency. From 2006 through 2008, he was head of the S.E.C.’s division of corporation finance, which oversees public companies’ disclosures and reporting.

Some Democrats also might question her path through the revolving door, in and out of government. While seen as a strong enforcer as a United States attorney, she went on in private practice to defend some of Wall Street’s biggest names, including Kenneth D. Lewis, a former head of Bank of America. She also represented JPMorgan Chase and the board of Morgan Stanley. Last year, the N.F.L. hired her to investigate allegations that the New Orleans Saints carried out a bounty system for hurting opponents.

Consumer advocates generally praised her appointment on Thursday. “Mary Jo White was a tough, smart, no-nonsense, broadly experienced and highly accomplished prosecutor,” said Dennis Kelleher, head of Better Markets, the nonprofit advocacy group. “She knew who the bad guys were, went after them and put them in prison when they broke the law.”

The appointment comes after the departure of Ms. Schapiro, who announced she would step down from the S.E.C. in late 2012. In a four-year tenure, she overhauled the agency after it was blamed for missing the warning signs of the crisis.

Since her exit, Washington and Wall Street have been abuzz with speculation about the next S.E.C. chief. President Obama quickly named Ms. Walter, then a Democratic commissioner at the agency, but her appointment was seen as a short-term solution. It is unclear if she will shift back to the commissioner role if Ms. White is confirmed.

In the wake of Ms. Schapiro’s exit, several other contenders surfaced, including Sallie L. Krawcheck, a longtime Wall Street executive. Richard G. Ketchum, chairman and chief executive of the Financial Industry Regulatory Authority, Wall Street’s internal policing organization, was also briefly mentioned as a long-shot contender.

Kitty Bennett contributed reporting.

Article source: http://dealbook.nytimes.com/2013/01/24/mary-jo-white-to-be-named-new-s-e-c-boss/?partner=rss&emc=rss

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Richard Cordray Named Consumer Chief in Recess Appointment

January 4, 2012 by Leave a Comment

The White House also announced that the president would use his recess powers to fill three vacancies to the National Labor Relations Board, another move certain to infuriate Republicans who had urged him not to do so.

The decision to install Mr. Cordray without Senate approval under the Constitutional provision for making appointments when lawmakers are in recess was a provocative opening salvo in Mr. Obama’s re-election strategy of demonizing Congress.

The president, announcing his decision before a political rally-like crowd of 1,300 at a high school here in Mr. Cordray’s home town, seemed to welcome a contentious second session of the 112th Congress, in which any attempts at bipartisan compromise appear in danger of being lost in all-out election-year war.

“I refuse to take ‘no’ for an answer,” Mr. Obama said.

He said he had looked for opportunities to work with Congress. But, he said, “I am not going to stand by while a minority in the Senate puts party ideology ahead of the people we were elected to serve.”

Building on efforts to cast himself as a protector of the middle-class, the president portrayed Mr. Cordray as his hand-appointed protector of consumers in his role as director of the Consumer Financial Protection Bureau. He wasted no time in painting Republican opposition to Mr. Cordray as another sign of the party putting the interests of Wall Street above the concerns of ordinary Americans.

“The only reason Republicans in the Senate have blocked Richard is because they don’t agree with the law that set up a consumer watchdog in the first place,” Mr. Obama said.

Republicans began attacking the appointment hours before Mr. Obama officially announced it, arguing that it was unconstitutional and calling it a brazen attempt to undercut the role of the Senate to advise and consent the executive branch on appointments.

“This is an extraordinary and entirely unprecedented power grab by President Obama that defies centuries of practice and the legal advice of his own Justice Department,” the House speaker, John A. Boehner, said in a prepared statement. “The precedent that would be set by this cavalier action would have a devastating effect on the checks and balances that are enshrined in our Constitution.”

For the president though, the appointment presented the perfect opportunity for him to try to capitalize on what the White House views as one of its greatest strengths going into the presidential election: the widespread disgust with which many Americans have come to view Congress.

By blocking Mr. Cordray’s appointment after he received majority support in the Senate — he was impeded by a filibuster — Congressional Republicans may have handed Mr. Obama another cudgel to hit them with this year, and the White House tried to pick an opportune time to wield it. The appointment seemed deliberately timed, coming a day after the Iowa caucus vote, and intended to kick dirt in the face of Republicans.

There was debate over whether Mr. Obama could have avoided a constitutional challenge by making the appointment on Tuesday in the short window between the first and second session of the 112th Congress.

By waiting until Wednesday, when Congress had a pro forma session that Republicans said meant it was not technically in recess, Mr. Obama may have provided Republicans a chance to argue that, technically, the recess appointment was invalid.

Jay Carney, the White House press secretary, said White House lawyers were confident Mr. Obama had the authority to make the appointment. “When pro forma sessions are simply used as an attempt to stop the president from making an appointment,” he said, then the president is within his rights to move ahead.

President George W. Bush, by this point in his tenure, Mr. Carney noted, had made 61 recess appointments, compared to Mr. Obama’s 28. But from 2007 through the end of Mr. Bush’s presidency, Democrats, under the rule of Senator Harry Reid of Nevada, the majority leader, used pro forma sessions to block others.

Democrats offered strong support of the president. “Despite admitting that President Obama’s nominee, Richard Cordray, is qualified for the job,” Mr. Reid said, “Republicans denied him an up-or-down vote in an effort to substantially weaken the agency.”

Mr. Cordray accompanied the president on Wednesday on his trip to Ohio. He looked slightly shell-shocked when he got off Marine One to board Air Force One for the flight to Cleveland, clutching his brown folder to his chest as he walked to the plane.

But he sounded ready for battle once the plane landed in Cleveland and reporters cornered him under the wing, issuing a not-so-veiled warning to Wall Street.

“We’re going to begin working to expand our program to non-banks, which is an area we haven’t been able to touch before now,” he said.

Charlie Savage contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=b1e4ebec65d891a8c16054c33ef52e14

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Op-Ed Contributor: Crippling the Right to Organize

December 17, 2011 by Leave a Comment

UNLESS something changes in Washington, American workers will, on New Year’s Day, effectively lose their right to be represented by a union. Two of the five seats on the National Labor Relations Board, which protects collective bargaining, are vacant, and on Dec. 31, the term of Craig Becker, a labor lawyer whom President Obama named to the board last year through a recess appointment, will expire. Without a quorum, the Supreme Court ruled last year, the board cannot decide cases.

What would this mean?

Workers illegally fired for union organizing won’t be reinstated with back pay. Employers will be able to get away with interfering with union elections. Perhaps most important, employers won’t have to recognize unions despite a majority vote by workers. Without the board to enforce labor law, most companies will not voluntarily deal with unions.

If this nightmare comes to pass, it will represent the culmination of three decades of Republican resistance to the board — an unwillingness to recognize the fundamental right of workers to band together, if they wish, to seek better pay and working conditions. But Mr. Obama is also partly to blame; in trying to install partisan stalwarts on the board, as his predecessors did, he is all but guaranteeing that the impasse will continue. On Wednesday, he announced his intention to nominate two pro-union lawyers to the board, though there is no realistic chance that either can gain Senate confirmation anytime soon.

For decades after its creation in 1935, the board was a relatively fair arbiter between labor and capital. It has protected workers’ right to organize by, among other things, overseeing elections that decide on union representation. Employers may not engage in unfair labor practices, like intimidating organizers and discriminating against union members. Unions are prohibited, too, from doing things like improperly pressuring workers to join.

The system began to run into trouble in the 1970s. Employers found loopholes that enabled them to delay the board’s administrative proceedings, sometimes for years. Reforms intended to speed up the board’s resolution of disputes have repeatedly foundered in Congress.

The precipitous decline of organized labor — principally a result of economic forces, not legal ones — cemented unions’ dependence on the board, despite its imperfections. Meanwhile, business interests, represented by an increasingly conservative Republican Party, became more assertive in fighting unions.

The board became dysfunctional. Traditionally, members were career civil servants or distinguished lawyers and academics from across the country. But starting in the Reagan era, the board’s composition began to tilt toward Washington insiders like former Congressional staff members and former lobbyists.

Starting with a compromise that allowed my confirmation in 1994, the board’s members and general counsel have been nominated in groups. In contrast to the old system, the new “batching” meant that nominees were named as a package acceptable to both parties. As a result, the board came to be filled with rigid ideologues. Some didn’t even have a background in labor law.

Under President George W. Bush, the board all but stopped using its discretion to obtain court orders against employers before the board’s own, convoluted, administrative process was completed — a power that, used fairly, is a crucial protection for workers. In 2007, in what has been called the September Massacre, the board issued rulings that made it easier for employers to block union organizing and harder for illegally fired employees to collect back pay. Democratic senators then blocked Mr. Bush from making recess appointments to the board, as President Bill Clinton had done. For 27 months, until March 2010, the board operated with only two members; in June 2010, the Supreme Court ruled that it needed at least three to issue decisions.

Under Mr. Obama, the board has begun to take enforcement more seriously, by pursuing the court orders that the board under Mr. Bush had abandoned. Sadly, though, the board has also been plagued by unnecessary controversy. In April, the acting general counsel issued a complaint over Boeing’s decision to build airplanes at a nonunion plant in South Carolina, following a dispute with Boeing machinists in Washington State. Although the complaint was dropped last week after the machinists reached a new contract agreement with Boeing, the controversy reignited Republican threats to cut financing for the board.

In my view, the complaint against Boeing was legally flawed, but the threats to cut the board’s budget represent unacceptable political interference. The shenanigans continue: last month, before the board tentatively approved new proposals that would expedite unionization elections, the sole Republican member threatened to resign, which would have again deprived the board of a quorum.

Mr. Obama needs to make this an election-year issue; if the board goes dark in January, he should draw attention to Congressional obstructionism during the campaign and defend the board’s role in protecting employees and employers. A new vision for labor-management cooperation must include not only a more powerful board, but also a less partisan one, with members who are independent and neutral experts. Otherwise, the partisan morass will continue, and American workers will suffer.

Article source: http://feeds.nytimes.com/click.phdo?i=67f914605b29865be4e6672243b982e1

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