Obama Names Ex-Prosecutor to Head SEC
Need to strike terror into the hearts of bank executives everywhere? Nominate Hugo Chavez to be head of the Securities and Exchange Commission. If he's not available, try an ex-federal prosecutor -- one who oversaw the U.S. attorney's office in Manhattan, and who made her name "prosecuting major terrorism and financial crime cases."
Shrinking violets need not apply
The White House has announced that President Obama will nominate Mary Jo White to be the next head of the SEC. If confirmed by the Senate, she'll replace Mary Shapiro, who served as head of the SEC for the past four years, with all of the attendant financial craziness that tenure implies.
If confirmed, White would also be the first ex-prosecutor to ever head the SEC. White was the first woman to be named U.S. attorney for New York state's southern district, which has jurisdiction over Wall Street and is a much sought-after posting.
According to the head of the nonprofit advocacy group Better Markets, Dennis Kelleher: "Mary Jo White was a tough, smart, no-nonsense, broadly experienced and highly accomplished prosecutor. She knew who the bad guys were, went after them and put them in prison when they broke the law."
Expect more ... of everything
So what does this mean for the big American banks and their shareholders? It's been a tough year for the Street already, with litigation of all sorts and regulatory action galore:
- Bank of America just agreed to pay Fannie Mae more than $10 billion to settle claims on soured home loans originated in the run-up to the financial crash.
- In October of last year, the New York State attorney's office filed suit against JPMorgan Chase for securities fraud committed by its Bear Stearns unit in the run-up to the financial crisis.
- Again in October, the Department of Justice filed suit against Wells Fargo for "reckless underwriting and fraudulent loan certification for thousands of FHA-insured loans that ultimately defaulted."
Mary Jo White's appointment, with her very "special" background, wasn't an accident. The president has already demonstrated that when it comes to what he sees as the choice between the interests of the middle class and the big banks, he will side with middle America.
Obama wouldn't appoint someone like White to head the SEC unless he expected more action against the big banks, or at the very least to ensure that there was someone at that critical regulatory agency he could count on to cut the banks very little slack going forward.
I don't think the repercussions from the financial crisis have finished materializing yet. And then there's LIBOR scandal fallout, which I also believe we've just seen the start of. As such, for all the banks listed above -- and more -- I would expect to hear plenty from the SEC over the next four years on a range of issues. For Wall Street, the fun may have just begun.
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The article Obama Names Ex-Prosecutor to Head SEC originally appeared on Fool.com.Fool contributor John Grgurich owns share of JPMorgan Chase. Follow John's dispatches from the bleeding heart of capitalism on Twitter @TMFGrgurich. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Bank of America, JPMorgan Chase, and Wells Fargo. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a simply cracking disclosure policy.
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