WASHINGTON, DC — President-elect Barack Obama has chosen a veteran
of the Securities and Exchange Commission to lead and revitalize the
agency now facing growing criticism for its failure to protect
investors at a time of unprecedented market turmoil.
official said Wednesday that Obama had chosen Mary Schapiro, a
securities industry regulator with extensive experience in Washington,
as chairwoman of the SEC. She would become the first woman to head the
agency, established in the 1930s in the tumult of the Great Depression.
is currently the chief executive officer of the Financial Industry
Regulatory Authority, the securities and brokerage industry’s
self-policing organization. She previously was chairwoman of the
Commodity Futures Trading Commission and served for six years as an SEC
commissioner under Presidents Ronald Reagan, George H.W. Bush and Bill
Schapiro is well respected in Washington circles as a
regulator and is considered an effective, if somewhat low-key,
She couldn’t be reached for comment Wednesday night.
brings "significant administrative experience" to the job, said Barbara
Roper, director of investor protection at the Consumer Federation of
America. And that would be useful "given that we’re looking at what is
essentially a broken agency," she said.
Schapiro "has had a real open door as far as we’ve been concerned," Roper added.
SEC stands at what could be one of the most difficult times in its
history, buffeted by criticism for failing to detect signs that major
Wall Street banks were in trouble before the financial crisis erupted
and for possibly lax oversight and enforcement in other areas.
the scandal involving disgraced money manager Bernard Madoff has
stunned Wall Street and injured investors around the globe, revelations
surfaced that staff at the SEC repeatedly failed over the course of a
decade to fully investigate credible allegations against Madoff. SEC
Chairman Christopher Cox on Tuesday said he was "gravely concerned" by
the breakdown in oversight and ordered the agency’s inspector general
to investigate what went wrong.
"We need a lot of dynamism in
order to repair the damage that the SEC has suffered" to its
reputation, said Mercer Bullard, head of a mutual fund watchdog group
and a former SEC attorney. "We need more than just a steady hand. We
need someone to re-establish the authority and credibility of the SEC."
Style-wise, Schapiro "needs to turn it up a notch" — something she may well be capable of, Bullard suggested.
Charles Schumer, D-N.Y., a member of the Senate Banking Committee,
called Schapiro "the kind of strong and experienced regulator that we
very much need in these times."
"I believe her nomination could be approved quickly and without controversy in the Senate," Schumer said in a statement.
Jamie Court, president of Consumer Watchdog in Santa Monica, Calif.,
said a more strongly pro-investor regulator was needed to lead the SEC.
can be trusted to enforce regulations, but she probably won’t
strengthen them," said Court. "She isn’t a shill for the industry, but
she is more of a caretaker. This sends the wrong message at the wrong
time when we need a really strong regulator to restore confidence in
Among other names that had been floated as possible
Obama choices for SEC chairman, some consumer advocates felt more
favorably toward Harvey Goldschmid, a law professor at Columbia
University and former SEC commissioner, and Damon Silvers, associate
counsel at the AFL-CIO labor federation.
Obama was expected to
make official his appointment of Schapiro on Thursday. The official who
signaled the selection did so on condition of anonymity because the
person wasn’t authorized to discuss personnel matters not yet made
Roper, from Consumer Federation, noted that Schapiro came
to FINRA, then known as NASD Regulation, in 1996, when the organization
had a black eye resulting from dissatisfaction with its policing of
traders in the Nasdaq stock market following a scandal there. That
parallels the situation now faced by the SEC, Roper said.
other charges, the SEC has drawn criticism that its oversight of the
big Wall Street investment houses — rotting from within from piled-up
securities tied to subprime mortgages — was lacking.
responded that the agency has taken decisive actions in response to the
market turmoil, including an unprecedented temporary ban this fall on
short-selling of stocks of financial companies. The SEC also has
procured billions of dollars in settlements with big investment banks
that have agreed to buy back auction-rate securities from investors
hurt by the collapse of that market in February.
Associated Press writers Nedra Pickler in Chicago and Michael Liedtke in San Francisco contributed to this report.