Will Obama's 'Change' Extend to the SEC?

Elections are blunt instruments that can have sharp consequences. For investors, a possible consequence of President Obama's re-election started coming into focus Tuesday, with the long-expected announcement that Mary Schapiro would step down after nearly four tumultuous years as head of the Securities and Exchange Commission.

President Obama's decision about who replaces her in the long term will help clarify whether his regime goes down in the books as more transactional than transformational. Most observers suggest that you not bet the house on transformation.

For now, Schapiro has been replaced for the remainder of her term, which runs until January 2014, by commissioner Elisse Walter. Walter is no one's idea of a boat rocker, so the chief frustration of Schapiro's critics--that her SEC did not move aggressively enough to tame a Wall Street run amok--is not likely to lift anytime soon.

Unless, of course, Obama surprises the world and nominates a serious reformer for a full five-year term when Walter's run ends a year from now. The odds of that? Not high, say people who favor a more aggressive SEC. The names of "likely" nominees--such as Treasury official Mary John Miller and former Citi executive Sally Krawcheck--do not inspire hope among folks like Barbara Roper, director of investor protection for the Consumer Federation of America. "If you put together a list of the leading advocates for financial reform," she says, "their names would not be on it."

[Read: Is Congress Ruining Stock Prices?]

They would, in effect, be an extension of Schapiro, says Jeff Connaughton, author of a new, highly praised book whose title, The Payoff: Why Wall Street Always Wins, pretty much tells you where he stands. Schapiro, says Connaughton, "didn't want to buck Wall Street in any significant way." On the other hand, he says, "I really don't want to pile on as she's on the way out the door. I'm sure it was an exhausting four years for her."

To be sure, Schapiro took the helm at an unusually difficult moment, and she can claim some sort of legacy. For starters, the SEC still exists. The Madoff scandal broke under Schapiro's predecessor, Chris Cox. But the SEC's passivity despite repeated warnings about Madoff (recounted in the infuriating Jeff Prosserman documentary Chasing Madoff), produced calls from Congressman Ron Paul and others to abolish the agency, or at least put it on a very tight leash.

Schapiro's SEC has also participated in the sweeping federal crackdown on insider trading that nailed former Goldman Sachs Director Rajat Gupta and former hedge-fund manager Raj Rajaratnam.

But Schapiro's critics tend to focus on the undone: the backlog of rule-makings necessary to implement Dodd-Frank financial reforms, the failure to prosecute key figures allegedly responsible for the financial crisis (former Countrywide chief Angelo Mozilo comes to mind), inaction on "high-frequency trading," which accelerated the "flash crash" of May 6, 2010 and could, many fear, produce a future meltdown.

[Read: 10 Golden Parachutes to Make Your Head Spin.]

Even conservatives not apt to lament bottlenecks in the regulation factory have lukewarm views about Schapiro. "I think the direction she was moving was that of many additional regulations and very often going to the point of micro-management," says David John, who studies retirement issues and financial institutions for the Heritage Foundation.

Ultimately, says Connaughton, Schapiro "was a regulatory creature with a 20-year history regulating Wall Street, and she was just not in my view bold enough."

So, then, who is? There are folks out there who might, as Connaughton puts it, "put the fear of God into Wall Street." The influential MIT economist Simon Johnson--an ardent proponent of taming Wall Street power--suggests Neil Barofsky, former inspector general for the Troubled Assets Relief Program (TARP); Dennis Kelleher, president of the nonprofit market watchdog Better Markets, which seeks thorough implementation of Dodd-Frank; and Sheila Bair, former head of the FDIC.

Then there's the fellow that some progressives privately describe as their "dream" candidate, former Delaware Sen. Ted Kaufman, who once chaired the Congressional Oversight Panel, charged by TARP legislation with keeping an eye on financial markets. Johnson's promotion of Kaufman may have been the spur for a petition on the blog Credo Action endorsing Kaufman and the others named above for the SEC chair.

Some think Johnson himself would be a good candidate. The SEC's chief needs "a good theoretical foundation for understanding the difference between what's good for traders and what's good for the economy. Those are two different things," says Wallace Turbeville, a senior fellow at the progressive think tank Demos. "Someone like Simon would clearly bring that to the table. Perhaps Neil Barofsky as well."

It's not clear, though, that any of them are interested. Kaufman, for one, says he's not. "I'd rule myself out," he said in an interview. "If this were 20 years ago I'd do it, but that's not where I am in my life. I'll be a great cheerleader. I'll help any way I can. But there's a whole bunch of good people out there." (Including MIT's Johnson: "I will be the first to nominate Simon," says Kaufman.)

Even if Kaufman, Johnson or the others were willing, what are the odds of the administration nominating them? "I'd love to be wrong but I'd say the odds are somewhere between slim and none," says the Consumer Federation's Roper. "I don't think they'd want someone they can't control, someone who doesn't share their very moderate, middle-of-the-road ideology on investor-protection issues in that position, sad to say."

One might imagine that a re-elected Obama is free to nominate a serious reformer, especially since the financial-services industry largely abandoned him this year anyway for Romney. But it's not just a question of whether Obama has a zeal for reform. It's a matter of what he thinks he can get through the Senate, and how much political ammunition an SEC appointment is worth.

[Read: Are Second Terms Good for Stocks?]

"There is a limit to the number of areas where they're going to want to fight an all-out battle to get someone confirmed," says Roper, "and I suspect the SEC chairmanship is not one of them."

Maybe Obama will keep Walter on for a full five-year term. "I think she'd be a good choice," says Kaufman. "She comes in, she knows what she's doing. At least it ought to be like an interim coach--give her a shot."

And who knows, maybe she'll be more active than many now expect. Says Demos's Turbeville: "I keep reflecting on the fact that Dwight Eisenhower appointed Earl Warren."

More From US News & World Report


Get stories like this on the Yahoo app and discover more every day.
Download it now.
  • German lawmakers to quiz ECB's Draghi over monetary policy Reuters - 11 minutes ago

    European Central Bank President Mario Draghi is set to face tough questions from German lawmakers on Wednesday about the bank's ultra-loose monetary policy, just as the ECB is considering even more stimulus to revive inflation. Relations have … More »

  • Dollar slightly higher after Clinton bests Trump in debate AFP - 17 minutes ago

    The US dollar earned a boost Tuesday after Hillary Clinton, who is favored by Wall Street, got the best of rival Donald Trump in the first US presidential debate. Most analysts scored the Democrat, widely ... … More »

  • Onetime rising hedge fund star John Thaler considers comeback Reuters - 17 minutes ago

    John Thaler, the tech, media and telecom stock specialist who shut down his hedge fund firm JAT Capital Management LP in 2015, is considering a return to managing other people's money, including launching a new hedge fund, two people familiar with … More »

  • Business Highlights Associated Press - 32 minutes ago

    ___ Unhappy Target customers send strong message on pill bottles Target's pharmacy customers are finding a change in pill bottle design hard to swallow. After CVS began operating Target's drugstores earlier ... … More »

  • ECB'S Lane says up to supervisors to mitigate risks of low rates
    ECB'S Lane says up to supervisors to mitigate risks of low rates Reuters - 37 minutes ago

    Ultra-low European Central Bank interest rates could lead to excessive risk-taking but it is up to supervisors to mitigate these risks as ECB policy is clearly doing the job intended, Governing Council member Philip Lane said on Tuesday. Lane, the … More »

  • Women petition UN chief to pursue Korea peace treaty
    Women petition UN chief to pursue Korea peace treaty AFP News - 40 minutes ago

    A hundred prominent women from 38 countries have directed a petition to UN Secretary General Ban Ki-moon urging him to fulfill his promise to achieve a permanent peace to end the Korean War. In a letter made public on Tuesday, a diverse group of … More »

  • Justice Dept. top national security official to leave post Associated Press - 44 minutes ago

    The Justice Department's top national security official is leaving his position next month, the department announced Tuesday. John Carlin, who has led the department's national security division since ... … More »

  • SpaceX chief envisions 1,000 passenger ships flying to Mars Associated Press - 56 minutes ago

    SpaceX founder Elon Musk envisions 1,000 passenger ships flying en masse to Mars within a century, "Battlestar Galactica" style. During a speech Tuesday in Mexico, Musk outlined his plan to establish ... … More »

  • Oil down 3 percent as Saudi, Iran dash hopes for an Algiers deal
    Oil down 3 percent as Saudi, Iran dash hopes for an Algiers deal Reuters - 1 hour 4 minutes ago

    Oil fell about 3 percent on Tuesday after Saudi Arabia and Iran dashed market hopes that the two major OPEC producers would find a compromise this week at meeting in Algiers to help ease a global glut of crude. Saudi Energy Minister Khalid al-Falih … More »

  • Iraq mediating between Saudis and Iran to support oil prices Reuters - 1 hour 5 minutes ago

    Iraq is carrying out a mediation between Saudi Arabia and Iran to bring about an agreement that would lift crude prices, at a meeting of crude-producing nations in Algiers, Iraqi Oil Minister Jabar Ali al-Luaibi said on Tuesday. Iran on Tuesday … More »

  • The Ford Focus RS was my favorite new track car — but now I like it on the road
    The Ford Focus RS was my favorite new track car — but now I like it on the road Business Insider - 1 hour 14 minutes ago

    Matthew DeBord/BI Behold, the hottest hatch? Ah, the … Continued The post The Ford Focus RS was my favorite new track car — but now I like it on the road appeared first on Business Insider. … More »

  • WHY IT MATTERS: Debate showed how divisive trade has become
    WHY IT MATTERS: Debate showed how divisive trade has become Associated Press - 1 hour 15 minutes ago

    THE ISSUE: Free trade has become a ripe target in the U.S. presidential campaign. At Monday's debate with Hillary Clinton, Donald Trump declared the need to renegotiate trade deals because U.S. trading ... … More »

  • Dutch court ruled in KLM favour in pension dispute - Air France-KLM Reuters - 1 hour 24 minutes ago

    Franco-Dutch airline Air France-KLM (AIRF.PA) said on Tuesday an Amsterdam court had ruled in favour of its Dutch arm KLM in a pension dispute with a pilots' union. The Dutch Airline Pilots Association, which represents 98 percent of KLM's pilots, … More »

  • How the Dow Jones industrial average fared on Tuesday Associated Press - 1 hour 26 minutes ago

    U.S. stocks closed higher after a survey showed consumer confidence is at a nine-year high, a sign Americans will keep spending in the months to come. Technology and consumer stocks made the largest gains. ... … More »

  • U.S. Treasury’s Lew sees no Fed surprises for emerging markets Reuters - 1 hour 32 minutes ago

    U.S. Treasury Secretary Jack Lew said major emerging market countries should be better able to anticipate a U.S. interest rate hike because of the Federal Reserve’s clear communications, a recapitalised International Monetary Fund and efforts to … More »

  • The Porsche 911 has convinced me that it’s the greatest car ever made
    The Porsche 911 has convinced me that it’s the greatest car ever made Business Insider - 1 hour 39 minutes ago

    Matthew DeBord/BI Want. If you want to, you … Continued The post The Porsche 911 has convinced me that it’s the greatest car ever made appeared first on Business Insider. … More »

  • Global stocks gain after U.S. presidential debate; oil drops
    Global stocks gain after U.S. presidential debate; oil drops Reuters - 1 hour 42 minutes ago

    By Richard Leong NEW YORK (Reuters) - Stock prices across major markets rose on Tuesday, led by U.S. technology and consumer sectors following the presidential debate between Hillary Clinton and Donald ... … More »

  • Canada to Make Petronas LNG Announcement Tuesday, Chiefs Say (1) Bloomberg - 1 hour 46 minutes ago

    Environment Minister Catherine McKenna, Natural Resources Minister Jim Carr and Fisheries Minister Dominic LeBlanc departed Ottawa for British Columbia after a cabinet meeting Tuesday morning, two indigenous leaders who oppose the development said. … More »

  • Stocks gain after U.S. presidential debate; oil drops
    Stocks gain after U.S. presidential debate; oil drops Reuters - 1 hour 50 minutes ago

    By Richard Leong NEW YORK (Reuters) - Stock prices across major markets rose on Tuesday, led by U.S. technology and consumer sectors following the presidential debate between Hillary Clinton and Donald ... … More »

  • US stocks lifted by consumer data, Clinton debate boost AFP - 1 hour 51 minutes ago

    US stocks jumped Tuesday following surprisingly good consumer confidence data and a strong performance by Democrat Hillary Clinton in the first US presidential debate. Consumer confidence spiked to 104.1 ... … More »

  • The top 10 books on Apple's iBooks-US Associated Press - 2 hours 0 minutes ago

    iBook charts for week ending September 25, 2016 (Rank, Book Title by Author Name, ISBN, Publisher ): iBooks US Bestseller List - Paid Books 1. The Girl on the Train by Paula Hawkins - 9780698185395 - (Penguin ... … More »

  • Landec tops Street 1Q forecasts Associated Press - 2 hours 9 minutes ago

    On a per-share basis, the Menlo Park, California-based company said it had profit of 12 cents. The results surpassed Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment ... … More »

  • World Bank unanimously reappoints President Jim Yong Kim
    World Bank unanimously reappoints President Jim Yong Kim AFP News - 2 hours 11 minutes ago

    The board of the World Bank has unanimously agreed to name Jim Yong Kim to a second term as president, the global lender announced Tuesday. Kim had been the only candidate in a process criticized by World Bank staff and campaigners as lacking in … More »

  • Markets Right Now: US stocks end higher Associated Press - 2 hours 15 minutes ago

    The latest on developments in global financial markets (all times local): 4:00 p.m. U.S. stocks are closing higher, with many of the biggest gains coming in technology and consumer stocks. Solid quarterly ... … More »

  • Facebook to appeal German order on WhatsApp data
    Facebook to appeal German order on WhatsApp data Reuters - 2 hours 22 minutes ago

    Facebook (FB.O) said it would appeal against an order by a German privacy regulator on Tuesday to stop collecting and storing data of German users of its messaging app WhatsApp and to delete all data that has already been forwarded to it. The … More »

Recent Quotes
Symbol Price Change % Chg 
Your most recently viewed tickers will automatically show up here if you type a ticker in the "Enter symbol/company" at the bottom of this module.
You need to enable your browser cookies to view your most recent quotes.
to view quotes in your portfolios.


  • Most Actives
    Most Actives
    NamePriceChange% Chg
  • % Gainers
    % Gainers
    NamePriceChange% Chg
  • % Losers
    % Losers
    NamePriceChange% Chg

Market Data

  • Currencies
    NamePriceChange% Chg
  • Commodities
    NamePriceChange% Chg
  • Bonds
    TreasuryYield (%)Yield Change