In the binary world of wing-nut commentators, everything is personal. What matters most to ideologues is individuals taking absolute positions in a battle of good versus evil: you’re either with us or you’re against us, and professional association is moral allegiance, regardless of the circumstances.
So it’s not surprising to see the left up in arms over the nomination of former Manhattan U.S. Attorney Mary Jo White by President Barack Obama to head the SEC. White had a long and widely-praised career as a public prosecutor and then went to private practice. There she represented big banks and, among others, Time Warner, the parent company of Time Magazine, in a suit brought by Donald Trump that was eventually dismissed.
To summarize the case against White: because she represented financial titans including Morgan Stanley and Bank of America, she’s morally tainted, sympathetic to the plight of big banks, and inevitably inclined to lean in their favor.
In the real world, where politics, economics and the law are much bigger than any one player, those same big banks should be scared witless this morning at the prospect of having Mary Jo White as a top enforcer.
First, she has a reputation as one of the toughest prosecutors in the country. Lightweights don’t run the U.S. Attorney’s office for the Southern District of New York, and during her nine years in charge her list of busts was prodigious.
Second, her ethical reputation is unchallenged, despite the sudden urge to damn her by association. “Mary Jo has an impeccable reputation for integrity and professionalism,” says William Burck, who worked for her in the Manhattan U.S. attorney’s office and is now co-managing partner of the DC office of the firm Quinn Emanuel Urquhart & Sullivan.
Most important, she’s seen the banks naked.
As the top lawyer for Bank of America in a fraud litigation brought by then-New York Attorney General Andrew Cuomo, she came to know everything about their books, their vulnerabilities and where and whether they crossed the line “Her time representing big banks should be viewed as an asset, not a liability,” says Burck. “She knows more about what is effective and ineffective regulation than just about anybody.”
Play the scenario out. An SEC investigator finds potential impropriety at a bank and opens an investigation. Even if White is recused because of specific representation of the bank, are the targets of the investigation more or less likely to cover their tracks or come clean knowing White is running the place and knowing that she has seen not just the banks’ general strategy for outmaneuvering regulators, but the details of how they do it?
Sure, the revolving door can lead to regulatory capture. But the mismatch between private industry and government in skills, knowledge and capacity is much more likely to produce that problem. Hiring someone who has seen the ugliest of the big banks is a smart choice.