Mary Jo White, president Obama's nominee for chairman of the Securities and Exchange Commission, told lawmakers Tuesday that her work representing high-profile clients as a criminal defense attorney will not create undue conflicts of interest or affect her ability effectively run the SEC.
In a Senate Banking Committee confirmation hearing, White also said the SEC should take the lead on any new regulations for money market funds and that if confirmed she will seek to strengthen the enforcement function of the SEC.
Some lawmakers expressed concern that conflicts of interest might force White, who has spent the last decade at law firm Debevoise & Plimpton LLP and heads the firm's litigation department, to recuse herself from working on many enforcement actions if she is confirmed.
Conflicts of interest might also arise because White's husband, John White, is a partner at New York law firm Cravath, Swaine & Moore LLP, they noted.
But White, who has represented high-profile clients like former Bank of America CEO Kenneth Lewis, said not to worry.
"I do not believe the recusals - the extent of them - will prevent me from fully performing my duties," she said, adding that she will not need to recuse herself from any of the SEC's regulatory work.
White, who was also U.S. Attorney for the Southern District of New York from 1993 to 2002, noted that she provided the White House and the SEC with details about her and her husband's legal work to ensure potential conflicts will not violate ethics regulations or laws, or create other problems.
Also, she said the U.S. Office of Government Ethics confirmed her compliance with such laws.
As a U.S. attorney, White prosecuted defendants like Ramzi Yousef, who helped plot the 1993 World Trade Center bombing. Earlier, as a first assistant U.S. attorney and acting U.S. attorney for the Eastern District of New York, she helped put mob boss John Gotti behind bars.
But Sen. Brown, D-Ohio, asked White what she has done in the last decade that demonstrates commitment to protecting the public.
White responded that her work as a defense attorney "does not mean … I embrace the policy thoughts of any of my clients," and said she was "exceptionally aggressive" in prosecuting large institutions and chief executive officers as a U.S. attorney.
"If I am confirmed, the American public will be my client," White added.
Lawmakers also questioned White's stance on the need for new regulations to ensure the stability of money market funds.
White said any new regulation should come from the SEC, not other agencies like the Financial Stability Oversight Council, which proposed new money market regulations late last year after SEC announced it would not pursue such measures. The SEC made the announcement after additional oversight was sought by then-SEC chair Mary Schapiro, but not supported by a majority of commissioners.
"Money market mutual funds are in the heartland of the SEC's expertise and it is the SEC's responsibility … in determining what additional reforms there should be," White told the committee.
If FSOC issues final recommendations, the SEC would be forced to implement them, or explain why not, under Dodd-Frank Act.
White also told lawmakers that if confirmed she will focus on improving SEC enforcement work.
"It must be fair, but it also must be bold and unrelenting," she said. "Proceeding aggressively against wrongdoers is not only the right thing to do, but it also will serve to deter the sharp and unlawful practices of others who must be made to think twice — and stop in their tracks — rather than risk discovery, pursuit, and punishment by the SEC."
She said she would also push the SEC to complete all rulemaking mandates contained in the Dodd-Frank Act and the Jumpstart Our Business Startups Act, but said rulemaking must be accompanied by "rigorous economic analysis," including an examination of costs and benefits.
"The SEC needs to get the rules right, but it also needs to get them done," she said.
She added that although the worst of the financial crisis is passed, now is still a critical time for the SEC.
"The SEC has made significant strides to strengthen its examination and enforcement functions, improve its capacity to assess risks and enhance its technology. Our markets, however, are continuously evolving … Fast-paced and constantly changing markets require constant monitoring and analysis."