President-elect Barack Obama nominated Mary Schapiro as the next chairman of the Securities and Exchange Commission, calling on her to help overhaul the troubled U.S. regulatory system.
Obama said Schapiro, a one-time acting SEC chairman and a political independent, who currently heads the Financial Industry Regulatory Authority, is “known as a regulator both smart and tough, so much so that she’s been criticized by the very industry outsiders who we need to get tough on.”
Schapiro has spent the past 20 years in leadership roles among various regulatory bodies, including as an SEC commissioner and briefly as the watchdog’s acting chairman in 1993. She left the agency in 1994, and has been at FINRA since it was created just over a year ago, after the consolidation of the National Association of Securities Dealers and NYSE Member Regulation. That non-government regulator oversees the 5,000 securities firms that do business with the U.S. public. She also chaired the Commodity Futures Trading Commission.
In her new role, Schapiro takes charge of an agency with an increasingly tarnished reputation. Atop her priority list: modernizing the U.S. regulatory system by collaborating with the other agencies — some of which she has worked for — to get a better handle on the current “complex marketplace,” she said.
Noting that it’s rare for a president-elect to designate a new SEC chairman before taking office, Obama stressed the need for changes in the financial system. He had harsh words for the current administration’s regulatory oversight during a morning press conference, during which he also announced his nomination of former Treasury undersecretary Gary Gensler to chair the Commodity Futures Commission, and of Georgetown law professor Daniel Tarullo for a seat on the Federal Reserve Board.
The alleged $50 billion Ponzi scheme by Bernard Madoff that came to light last week has served as another reminder for the pressing need for regulatory reform, Obama said. “Regulators who were assigned to oversee Wall Street dropped the ball,” he added.
The SEC and current chairman Christopher Cox have been under extreme fire this year — from the March collapse of Bear Stearns, soon after Cox claimed the bank was well-capitalized, to the current Madoff scandal, which the SEC has scrambled to address this week after years of missing red flags that something was amiss. Cox has also played a distant third-fiddle to Treasury secretary Henry Paulson and Federal Reserve Board chairman Ben Bernanke, as those two swept through press conferences and congressional hearings this fall to explain how the financial crisis could be fixed.
Schapiro’s nomination has former SEC staffers hopeful that she can turn the regulator’s reputation around. “Below the headlines and all the noise, there are real people who are very dedicated and competent. Their morale is suffering,” CFO.com is told by David B.H. Martin, a partner at Covington & Burling LLP and a former director at the SEC’s Division of Corporation Finance.
Observers say she will have to juggle inspiring staff with implementing new processes that may be inevitable considering the public fallout from the Madoff investigation. According to Martin and others who know her, Schapiro is known as a leader who listens to various sides of any issue, from employees to investors and organizations that may be involved in heated enforcement matters.