[ by Howard Haykin ]

President Obama selects Mary Jo White, the former U.S. attorney turned white-collar defense lawyer, as the next Chairman of the SEC.  The nomination was be made official on Thursday, 1/24, at 2:30 p.m. ET.   The White House program will include the renomination of Richard Cordray to lead the Consumer Financial Protection Bureau, a role he has held for the last year under a recess appointment.

The nominations send a strong signal that the Obama administration will maintain a tough line with Wall Street firms.  Mr. Cordray is also a former prosecutor.  The selections also reflect a departure from the typical approach of selecting market experts or academicians as heads of regulatory agencies.

SEC Appointment.   Ms. White, a partner at Debevoise & Plimpton, served nearly a decade as U.S. attorney in New York - the first woman named to this post.  In that role she oversaw the prosecution of John Gotti, the 'Teflon Don' mafia boss, as well as the people responsible for the 1993 World Trade Center bombing.  Ms. White also served as a director of Nasdaq.  Otherwise, she has built her career on the legal side of Wall Street.

While seen as a strong enforcer as a U.S. attorney, Ms. White switched allegiances when she went to private practice - defending the likes of Ken Lewis, former CEO of Bank of America.  This might create some friction, as well.  Yet, as Dennis Kelleher, head of the nonprofit advocacy group, Better Markets, said:  "She knew who the bad guys were, went after them and put them in prison when they broke the law."

Ms. White will succeed Elisse Walter, a longtime SEC official, who took over as Chairman after Mary Schapiro stepped down in December.  It is expected that Ms. White will receive broad support, although she likely will be tested on her knowledge of the more arcane aspects of the financial markets.  Mary Jo White's husband, John White, is a veteran of the SEC - having served from 2006 through 2008 as head of the Division of Corporation Finance. 
 

CFPB Selection.   Mr. Cordray was the attorney general of Ohio, where he made a name for himself by suing Wall Street companies in the wake of the financial crisis.  He undertook a series of prominent lawsuits against big names in finance world, including Bank of America and the American Int'l Group. 

Mr. Cordray joined the consumer bureau in 2011 as its enforcement director.  Mr. Cordray's confirmation is expected to hit several speed bumps.  Two years ago, the Senate declined to confirm Mr. Cordray after Republicans vowed to block any candidate for the consumer bureau, a new agency created to rein in the financial industry's excesses. 

The White House expects Ms. White and Mr. Cordray to draw on their prosecutorial backgrounds while carrying out a broad regulatory agenda under the Dodd-Frank Act. Congress enacted the law, which mandates a regulatory overhaul, in response to the 2008 financial crisis.

SEC Candidates Not Selected.   Others who were on the short list of viable candidates to head the SEC included longtime Wall Street executive Sallie Krawcheck,  and current FINRA Chairman and CEO Richard Ketchum, Wall Street's internal policing organization, was also briefly mentioned as a long-shot contender.  

While Mr. Ketchum will continue to be in the thick of regulatory reform, Ms. Krawchek is currently a Wall Street exec "without portfolio."  She would make a fine regulatory head - given her market knowledge, her political savvy, and her many connections to the power brokers of  Wall Street.  Hopefully, an opportunity will arise in the near term. 

For further details, go to:   [ Dealbook, 1/24/13 ].