Yesterday, the U.S. voted to make Donald Trump the next President of the United States. What does this mean for the SEC and financial regulation? The short answer is that it is still far too early to know at this time.
We do know a couple of things, however:
1. The Dodd-Frank Act may be in the cross hairs. As discussed in today's WSJ, one consistent message that Trump delivered throughout the campaign about financial regulation was that he wants to get eliminate some or all of Dodd-Frank. Trump told Fox News in October 2015 that "we have to get rid of Dodd-Frank. The banks aren’t loaning to people that need it. The regulators are running the banks.”
This negative view of Dodd-Frank is held by many Republicans, including current and former SEC commissioners. SEC commissioner Michael Piwowar remains a staunch critic of Dodd-Frank, as was former SEC commissioner Dan Gallagher, who left the SEC last year. Gallagher, you may recall, said in 2014 that Dodd-Frank was leading the agency on a “death march,” and later stated memorably that "Dodd-Frankenstein” had caused the SEC to spend "much, if not most, of its time and resources for nearly half a decade shoveling manure, in some cases for no discernable purpose whatsoever." One of President Obama's SEC commissioner nominees, Hester Peirce, is also a harsh critic of Dodd-Frank and the author of the book, "Dodd-Frank: What it does and why it’s flawed.”
2. There is some interesting legal history between Trump and current top SEC officials. In 2007, Trump was subjected to an intense, probing deposition "unlike anything else in the public record of Trump’s life." Read this post for the whole story but the attorneys who deposed Trump in this case were none other than current SEC Chair Mary Jo White and SEC Enforcement Director Andrew Ceresney when they were both lawyers in private practice. Awkward!
Late last month, Bloomberg reported that the Trump campaign had asked Chair White if she would "consider staying on to give the next president time to pick a successor," so White may still remain at the SEC until at least early 2017.
3. The diminished role of Sen. Elizabeth Warren. Sen. Warren has been a constant thorn in SEC Chair White's side. As recently as mid-October 2016, Sen. Warren was even calling for President Obama to demote Chair White to a commissioner and designate another SEC commissioner as Chair of the agency. This had no realistic chance of happening, but, as this WSJ op-ed argues, was actually a warning to a President Hillary Clinton that she should replace White with a new chair who would impose a rule aggressively sought by Warren that would require public companies to disclose their political contributions. If not, "anyone Mrs. Clinton nominates as SEC chair won’t make it through a Democratic Senate without the approval of Queen Elizabeth," the WSJ asserted in the op-ed. So much for that power play!