Obama Finds A Tenured Insider To Head The SEC

True to form, Obama has found another tenured insider to fill an important cabinet position.  With the appointment of Mary Jo White to the SEC, Obama has once again shown himself to be the ultimate oxymoron while putting a little GHB in our drinks.  Mr. “hope and change” and the great deliverer of “transparency” has revealed that the fraud and looting will continue until confidence is restored.  Thus we get the appointment of another Wall Street/Washington insider who will be mindful of being too harsh on all those pampered princes in their Manhattan high rises.  Don’t take my word for it.  Those were White’s own words.

In a recent interview, while working as a defense attorney for Debevoise & Plimpton, White offered an opinion on the financial crisis:

“The financial crisis was so expensive and so many people were injured that one’s instinct is to think that there must have been massive wrongdoing from the top on down…But criminal cases must be built on compelling evidence, not suppositions, and evidence of broad-based misconduct that would rise to that level doesn’t exist.”

Really?  The evidence doesn’t exist?  This meme might sound familiar.  It’s the same line paraded by Lanny Breuer in his PBS interviews.  And we should not forget that Obama himself seems to have the same viewpoint from 40,000 feet.  It certainly helps to look at these things from a distance you know, because once you zoom in for a closer view, the fraud actually looks like, well…fraud.

Here’s what Obama said to Steve Kroft in his 60 Minutes interview a few years ago:

“I can’t, as President of the United States, comment on the decisions about particular prosecutions. That’s the job of the Justice Department. And we keep those things separate, so that there’s no political influence on decisions made by professional prosecutors. I can tell you, just from 40,000 feet, that some of the most damaging behavior on Wall Street, in some cases, some of the least ethical behavior on Wall Street, wasn’t illegal.”

In 2002 White was apparently grooming for one of the more recent stints she’s held representing Wall Street firms.  In an interview with the New York Times she had this to say about potentially overzealous prosecutions:

“Arresting executives is a way that the government tries to prove it means what it says in terms of cracking down,”….“The danger, of course — and it’s a significant one — is overkill, sweeping into the prosecutorial frenzy people who should not be charged.”

When you step back and look at the facts, White fits perfectly within the current Administration’s playbook.  White has some pretty solid credentials, including jailing mobster John Gotti and successfully prosecuting terrorists.  White was a former U.S. attorney of the Southern District of New York.  She also has the most important credential necessary to keep the party going.  You see, White apparently sold her soul a little over a decade ago.  It’s been a while since White worked as a prosecutor.  During the last 10 years or so, White has made the rounds representing the interests of major corporations as defense counsel.  In 2010 she represented former Bank of America CEO Ken Lewis, and she’s also recently represented JPMorgan in cases stemming from the financial crisis.

White also has another huge conflict of interest should she get approved for the SEC post.  White’s financial disclosures reveal that she is to receive $42,500 per month (not a misprint) from Debevoise & Plimpton for the rest of her life should she leave the firm. That means she has a vested interest in keeping the firm profitable while it’s busy defending all those white-collar criminals clients. In a normal logic-based environment, such a conflict would be grounds for an immediate disqualification. But then again, this is Washington. Conflicts of interest and the rule of law are only for little people.

If you want to know what to expect from White at the SEC, I would suggest you talk to Gary Aguirre. Gary Aguirre was working at the SEC in 2004, looking into insider trading allegations surrounding soon-to-be Morgan Stanley CEO John Mack.  At the time, Mary Jo White had already made the turn and was working for Morgan Stanley’s hired gun, Debevoise and Plimpton.  Aguirre was digging into the case uncovering some rather interesting evidence, and he asked for permission to interview John Mack.  Aguirre was denied the opportunity to interview Mack by his boss who told him Mack had “powerful political connections”.

As Matt Taibbi details, it didn’t take long for Mary Jo White to pick up the phone and call the SEC’s director of enforcement.  The director apparently reassured White that nothing bad would happen, eventually dismissing the case against Mack.  A month after Aguirre was blocked from interviewing Mack, he was mysteriously fired without notice.  The case against Mack was dropped, and Aguirre eventually received a settlement of $775,000 from the SEC for wrongful termination.  As it turns out, the SEC official who apparently helped kill the investigation into Mack, Paul Berger, went on to take a job with….wait for it…..Debevoise and Plimpton, the same firm retained by Morgan Stanley.

Gary Aguirre knows what to expect with White heading the SEC, and so should we.  I would suggest you read the editor’s note in Taibbi’s piece.  Taibbi has apparently received some complaints about not fawning over the White appointment.  Taibbi correctly refutes those complaints with the simple facts regarding White’s more recent body of work.  As I said previously, White possesses the most important ingredient Obama is looking for; White opted for a bigger paycheck playing for the other team,  leaving a role in government enforcement to make large sums of money working for the very people she used to police. Once you make that move, you can’t go back, at least not with the kind of credibility or veracity which is sorely needed at the SEC.  For now at least, it looks as though the revolving door between Washington and Wall Street will continue to spin, along with the corruption and stench that currently envelops it.

Many years ago, we had journalists who understood the flaws of man and the need for justice and equality under the law.  While some may be hoping for the best with White at the helm of the SEC, recent history and facts suggest this hope is misplaced.  Edward R. Murrow had an important message for the American people in 1954.  It’s a message worth hearing again, because the decadence and complacency to which he was referring have once again brought this country to a profound state of lawlessness and corruption.

“The only thing that counts is the right to know, to speak, to think — that, and the sanctity of the courts. Otherwise it’s not America. No one man can terrorize a whole nation unless we are all his accomplices.”

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