Unless you’ve been off the grid, you’ve surely read about the kerfuffle between Senator Elizabeth Warren and SEC Chair Mary Jo White (here’s an example). It seems that Senator Warren is unhappy that the SEC, under Chair White’s leadership, hasn’t done enough. Specifically – among other things – it hasn’t adopted a bunch of rules that the Senator believes are critical, such as requiring public companies to disclose the ratio of CEO pay to that of rank-and-file employees.
I’ve written before about Congressional interference in SEC rulemakings (for example, Connecticut Senator Blumenthal’s recommendation that the SEC should deem “fee-shifting” by-laws not just a risk factor but a “major” risk factor – discussed here). I’ve also called out the SEC when I think it’s out of line (for example, here). However, the recent attacks by Senator Warren seem to me to be beyond the pale – they’re strident and scream disrespect for Chair White and for the Commission generally.
Moreover, they demonstrate Senator Warren’s inability, failure or refusal (or all of the above) to recognize certain fundamental issues with which the SEC has to deal, including these (among many others):
- The Commission is comprised of five members – three from the President’s party and two from the not-so-loyal opposition. In today’s era of hyper-partisan politics, that means that Commission votes are frequently approved by a one-vote margin – not the ideal way to regulate. And it’s worse when a member of the majority isn’t in sync with his/her colleagues, as has happened a few times as well; then you end up with a deadlock.
- One of the reasons that the Commission has been slow to adopt some rules is that Congress keeps ramming silly mandates down the SEC’s throat – rulemakings on conflict minerals and pay ratio disclosure foremost among them (see my post on the latter, “CEO pay ratios: ineffective disclosure on steroids”). Dealing with these rulemakings takes away time from the real functions of the Commission, the most important of which (at least to my way of thinking) should be seeking to ensure the optimal functioning of our capital markets as well as the protection of investors.
- Being called on the carpet – i.e., constantly having to testify before Congress – also doesn’t help. Not only Commissioners, but also members of the SEC Staff – among the best and brightest federal employees – have complained for years about constantly having to spend precious time preparing for and giving testimony before grandstanding politicians when they could be at their desks doing real work.
I’m not in a position to question Senator Warren’s motives; for all I know, she’s entirely sincere. But she’s really not helping things at all. Like nearly everyone else in Washington, she seems to believe – rather, she knows – that she’s right and therefore she’s under no obligation to consider alternative points of view. Consequently, she’s only increasing the level of partisanship and rancor in Washington, offending decent, hard-working civil servants in the bargain. To date, the SEC Staff has managed to stay above the fray, but it’s hard to work for an organization that is rapidly becoming the Rodney Dangerfield of the federal government. But if this sort of thing keeps up, who in his/her right mind would want to go there?