White’s SEC Goodbye Sets Stage for Brave New Wall St. World

Wall Street and Washington, D.C., are transient towns, in a way. Heads of banks and regulatory agencies come and go, and staffers come and go. Yet the institutions endure.

With the brave new political world under Donald Trump as president, some institutions may be effectively refashioned as some high-profile individuals step aside or are pushed out.

Case in point: The news earlier this week that Mary Jo White, who heads the Securities and Exchange Commission (SEC), would leave her post three years before the end of her term will have likely ripple effects far beyond the mere name at the top of staffing directory.

The SEC is charged with the oversight of the financial industry in the U.S., with a reach that has extended from big banks to hedge funds. One of the crowning achievements of the SEC in the wake of the financial crisis has been to help introduce risk controls at banks (meaning they can’t effectively gamble on market volatility and other events as they were once wont to do).

But now with the Trump administration coming in, White has decided to bow, and the deregulation deluge may begin in earnest. Yes, Dodd-Frank may be on the chopping block, with at least some vivisection on the way. No less than Paul Atkins, who is the head of the transition team for the SEC, has said the legislation is a “calamity” — and he’s also served previously a commissioner with the SEC. And, of course, one wonders just how far-reaching changes might be made at the Consumer Financial Protection Bureau, with looming possibilities embracing creating a five-member commission and scaling rolling back funding.

White’s departure also leaves the SEC looking like swiss cheese, with the five-member commission showing — post-White — three vacancies. White has been known, among other initiatives, for efforts to get companies to admit that they have been guilty in cases of malfeasance, even as they paid fines in excess of $4 billion over the course of White’s tenure. Companies’ previous MO had been to pony up penalties while neither admitting or denying guilt.

As Trump takes over the Oval Office and stands Washington tradition on its head, we’ll likely see appointments with much more vocal views about free markets and even some rollback of oversight and auditing activities.