Legal News

The New Face of Mary Schapiro?

By Dan Slater

With the confirmation hearing of Attorney General-nominee Eric Holder (not to mention a large airplane floating in the Hudson River) dominating much of today’s news, the confirmation hearing of Mary Schapiro, whom Barack Obama has nominated for SEC Chairperson, got a bit less attention than it might have otherwise.

In a front-page story today, the Journal — noting that when Obama nominated Schapiro he criticized regulators for a “failure of oversight” in the markets meltdown and the Bernard Madoff scandal — wrote that a close examination of Schapiro’s record as a regulator shows she has infrequently pursued tough action against big Wall Street firms.The Journal noted that the Financial Industry Regulatory Authority, or Finra, the agency she heads, missed the mortgage crisis and Bernard Madoff’s alleged $50 billion Ponzi scheme. (Finra is the largest non-governmental regulator for all securities firms doing business with the American public.)

But at her confirmation hearing today, according to the Times and the Journal, Schapiro (Franklin & Marshall College, George Washington U. Law) outlined an ambitious agenda that included tighter regulation of hedge funds and credit rating agencies, as well as greater federal oversight of insurance companies and credit default swaps, the unregulated financial instruments that many say contributed to the market crisis.

Schapiro’s heavy reliance on regulation, writes the Times, marked a sharply different tone from her time as a Wall Street regulator, particularly in recent years, when she has said in speeches that she would work closely with industry to reduce what she had criticized as overly burdensome regulation.

“There are many reasons for this crisis — and one of them is that our regulatory system has not kept pace with the markets and the needs of investors,” Schapiro reportedly testified. “It is precisely during times like this that we need an S.E.C. that is the investor’s advocate — that has the staff, the will and the resources necessary to move with great urgency to bring transparency and accountability to all corners of the marketplace, to vigorously prosecute those who have broken the law and cheated investors, and to modernize our country’s regulatory system to match the realities of today’s global, interdependent markets.”

Full post as published by Law Blog - WSJ.com on January 15, 2009 (boomark / email).