WASHINGTON
- Mary Schapiro, the head of the Securities and Exchange Commission,
will step down after a tumultuous four years of working to rehabilitate
the agency. SEC Commissioner Elisse Walter will temporarily serve as
chairman-designate.
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By Aruna Viswanatha
WASHINGTON |
Mon Nov 26, 2012 6:05pm EST
(Reuters) - The head of the U.S. Securities and Exchange Commission,
Mary Schapiro, will step down next month after a tumultuous four years
spent rehabilitating the agency's battered reputation, handing the reins
at least temporarily to a close ally.
"We've gotten a lot done, I'm
really proud of where the agency is today, so it seemed like a good
time," Schapiro said in an interview on Monday after announcing her
departure.
SEC Commissioner Elisse
Walter, a career regulator who has sided with Schapiro on most of the
critical issues before the agency, will serve as chairman-designate, the
White House said.
Walter, whose
SEC term has already expired, could serve until December of next year,
buying time for President Barack Obama to win Senate approval for a
long-term replacement. Obama plans to nominate someone soon, a White
House official said.
Walter is among the candidates likely to be considered, as is Treasury official Mary Miller.
Schapiro's
departure leaves the commission split 2-2 between Democrats and
Republicans, which could make it harder for the commission to come to
agreement.
Whoever takes the reins
will need to finish Schapiro's task of resurrecting the agency's
reputation, which was badly tarnished by the 2007-2009 financial crisis.
When
Schapiro took over in 2009, the agency was under heavy fire for
regulatory blindspots that critics said helped fuel the crisis. It was
also lambasted for failing to catch now-convicted Ponzi schemer Bernard
Madoff, whose fraud cost investors an estimated $65 billion.
In
addition to shoring up the agency's name, Schapiro had to fight
numerous other fires -- from the 2010 "flash crash" that sent the Dow Jones industrial average tumbling 700 points within minutes to high-profile court losses.
"Chairman Schapiro was dealt a very difficult hand," said Boston University law professor Cornelius Hurley.
UNFINISHED BUSINESS
Schapiro
is a registered independent who was appointed by both Democrats and
Republicans during her career. Yet she was mired in political battles
and was unable to get the votes on one of her signature issues, reform
of money market funds.
She leaves much unfinished business for Walter and whoever assumes the position on a more permanent basis.
In
addition to money market reforms, the SEC is considering additional
market structure safeguards and still needs to write a number of major
rules dictated by the 2010 Dodd-Frank financial reform law, including a
final version of the Volcker rule to ban banks from trading for their
own accounts.
Speculation had
swirled for months that Schapiro would leave soon after the November
election. Walter's appointment as chairman-designate leaves open the
question of how long she will serve and who ultimately will lead the
agency.
Potential replacements
include Miller, who spent nearly three decades at T. Rowe Price before
joining the Obama administration. Miller now serves in the Treasury
Department's top domestic finance job.
At
the Treasury, Miller has been outspoken about the need to make money
markets safer for investors and would likely continue that effort were
she to be nominated as SEC chair.
Other
possibilities include Sallie Krawcheck, a former top executive at Bank
of America and Citigroup, and Richard Ketchum, chairman of FINRA, Wall
Street's self-funded regulator. SEC enforcement director Robert Khuzami,
a Republican, is considered a long shot.
While
Walter is also a possibility, she has already been at the SEC for more
than four years and served as acting chairman before Schapiro's
confirmation.
In many ways, Walter
and Schapiro have been joined at the hip in their career experience and
orientations. They both spent years as attorneys at the Commodity
Futures Trading Commission and at the SEC, with stints in top positions
at FINRA.
"She is a strong advocate
of disclosure, of regulation and of consumer protection," former SEC
Commissioner Edward Fleischman said of Walter.
SCHAPIRO's LEGACY
Schapiro's
time at the SEC was marked by some controversy and her departure leaves
uncertainty around major initiatives. But former SEC officials said
Schapiro helped revive a moribund agency.
"I think she saved the SEC, which was close to extinction when she took over," former SEC Chairman Arthur Levitt told Reuters.
Schapiro
said in the interview that steering the agency out of that period in
its history was one of the highlights of her tenure there.
She
streamlined the SEC enforcement process, hired new types of employees
and created a new tips database and a whistleblower office. In the past
two years, the agency logged a record number of enforcement actions and
brought major financial crisis cases, including a record $550 million
settlement in 2010 with Goldman Sachs. COPY http://www.reuters.com/
It
has also implemented reforms to protect markets against major swings
caused by errant technology -- as was the case with the flash crash.
"The
SEC is stronger, and our financial system is safer and better able to
serve the American people -- thanks in large part to Mary's hard work,"
Obama said in a statement.
But the
agency has also been bogged down with major rules the 2010 Dodd-Frank
financial regulation law required it to write, many of which are still
in process.
Business groups have
challenged much of the SEC's recent rule-making efforts and won major
battles, including convincing a federal appeals court to throw out the
agency's "proxy access" rule, which would have empowered shareholders to
nominate directors to corporate boards.
Schapiro did not say what she planned to do next.
(Additional
reporting by Sarah Lynch, Mark Felsenthal and Rachelle Younglai in
Washington and Suzanne Barlyn in New York; Editing by Gerald E.
McCormick, Andrew Hay, Tim Ahmann and Dan Grebler) COPY http://www.reuters.com
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