Obama Names SEC Pick

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President-elect Barack Obama has named Mary Schapiro to head the Securities and Exchange Commission. In a news conference in Chicago, Obama said government regulators "had dropped the ball," leading to the financial meltdown.


From NPR News, this is All Things Considered. I'm Robert Siegel.


And I'm Melissa Block. President-elect Barack Obama is nearly finished announcing his Cabinet and other major positions in his administration. Today he named his choice to head the Securities and Exchange Commission. She is Mary Schapiro, a veteran financial regulator. And NPR has confirmed that Mr. Obama will nominate Congresswoman Hilda Solis as secretary of labor. More on her in a moment.

SIEGEL: First, the choice of Mary Schapiro to head the SEC. The agency has been under fire lately for completely missing the alleged Ponzi scheme of Bernard Madoff. It may turn out to be one of Wall Street's biggest frauds ever. As NPR's Jim Zarroli reports, there were questions today about whether Schapiro is the right person to restore the agency's credibility.

JIM ZARROLI: The chairman of the SEC has not usually been a high-profile job, and new administrations sometimes wait months to appoint someone to the position. But with a long string of crises and scandals on Wall Street over the past year, the president-elect said he wanted to waste no time filling the job. He said, for too long Washington officials have sat back and watched the meltdown in the financial markets.

President-elect BARACK OBAMA: We have been asleep at the switch, not just some of the regulatory agencies, but some of the congressional committees that might have been taking a look at this stuff. We have not been as aggressive, and we had a White House that started with the premise that deregulation was always good.

ZARROLI: Among his other appointments, Gary Gensler, a former undersecretary of the Treasury in the Clinton administration, will chair the Commodity Futures Trading Commission. Law professor Daniel Tarullo was named at the Federal Reserve Board. As for Schapiro, she is a well-known figure on Wall Street who now heads the Financial Industry Regulatory Authority which oversees securities firms. Schapiro comes to the SEC at a time when it's been widely criticized for failing to prevent some of the trading abuses that have occurred in the market. Barbara Roper of the Consumer Federation of America says Schapiro will have the enormous challenge of restoring the commission's credibility.

Ms. BARBARA ROPER (Director of Investor Protection, Consumer Federation of America): I joked when someone else asked me this question. They said what are the challenges facing the new SEC chairman? And I reeled them off and said, you know, I'm hoping they're looking at Superman for the job. I mean, this is a big task that she's taken on.

ZARROLI: In her press conference today, Schapiro spoke about some of the challenges the commission faces, even making an oblique reference to the Bernie Madoff debacle which has resulted in the loss of tens of billions of investor dollars.

Ms. MARY SCHAPIRO (CEO, Financial Industry Regulatory Authority): As the events of the past year, even the past week, have shown us, this is a perilous time for investors. Americans are looking to policymakers and regulators to restore stability and trust to our financial markets.

ZARROLI: Schapiro is expected to become a key voice for the administration in the overhaul of the agencies that regulate the markets. Wall Street has evolved greatly in recent years with financial firms increasingly getting into each other's lines of business, and the president-elect has talked about consolidating the SEC and the CFTC, two of the most important regulatory bodies. James Angel, associate professor of finance at Georgetown University, notes that Schapiro has held key posts in both agencies.

Dr. JAMES ANGEL (Associate Professor of Finance, Georgetown University): I have enormous respect for Mary Schapiro. She's experienced. She knows what she's up against.

ZARROLI: But there were also some who expressed disappointment in Schapiro's selection. They pointed out that Schapiro is something of an insider in the clubby world of Wall Street, hardly the kind of person who can be counted on to shake things up. Barbara Roper said that as a manager, Schapiro is a consensus builder, and that may not be what the agency needs right now.

Ms. ROPER: I'm among those who believe there needs to be a real top-to-bottom review at that agency, and my one question is whether she will be as aggressive as we think she needs to be in conducting that review.

ZARROLI: What is undeniable is that Schapiro brings extensive knowledge of the way the markets work. And in the murky and none-too-transparent world of Wall Street, that may ultimately be the most important qualification. Jim Zarroli, NPR News, New York.

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Obama Names Mary Schapiro As SEC Chief

Mary Schapiro and Gary Gensler arrive at President-elect Obama's news conference. i

Mary Schapiro and Gary Gensler arrive at President-elect Obama's news conference in Chicago Thursday. Obama named Schapiro to head the Securities and Exchange Commission and Gensler to chair the Commodity Futures Trading Commission. Nicholas Kamm/AFP/Getty Images hide caption

toggle caption Nicholas Kamm/AFP/Getty Images
Mary Schapiro and Gary Gensler arrive at President-elect Obama's news conference.

Mary Schapiro and Gary Gensler arrive at President-elect Obama's news conference in Chicago Thursday. Obama named Schapiro to head the Securities and Exchange Commission and Gensler to chair the Commodity Futures Trading Commission.

Nicholas Kamm/AFP/Getty Images

A Focus On The Markets

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President-elect Obama rounded out his economic team on Thursday, naming Mary Schapiro to head the Securities and Exchange Commission, an agency that has been the focus of criticism in recent weeks for failing to act on questionable practices that may have cost investors billions of dollars.

In addition, Obama announced Gary Gensler, a former Treasury official in the Clinton administration, as his pick to lead the Commodity Futures Trading Commission and Daniel Tarullo, a Georgetown law professor who also worked for President Clinton, to fill an open seat on the Federal Reserve Board.

Obama appeared with Schapiro, Gensler and Tarullo at a news conference on Thursday in Chicago — his fourth in as many days to announce administration appointments.

The president-elect used the occasion to call for "a shift in ethics on Wall Street."

The recent collapse of an alleged $50 billion dollar Ponzi scheme to defraud investors "reminded us yet again at how badly reform is needed," he said.

Obama said Washington was "asleep at the switch" and that the scheme, allegedly carried out by highflying investor Bernard Madoff, "was made possible in part because the regulators who were assigned to oversee Wall Street dropped the ball."

Schapiro, a former SEC commissioner under Presidents Reagan and George H.W. Bush, was appointed acting chairman of the agency under President Clinton.

Speaking at the news conference on Thursday, Schapiro said there must be "consistent and robust enforcement" of regulations to protect investors, saying it will be her top priority as SEC chief.

She currently heads the Financial Industry Regulatory Authority, which describes itself as the largest nongovernmental regulator for all securities firms doing business with the U.S. public. She was chairman of the CFTC from 1994-96, a post she was named to by President Clinton.

The SEC has been criticized for failing to heed earlier warnings about Madoff, whose alleged pyramid scheme has stunned Wall Street and hurt investors across the globe.

Since the Madoff scandal broke, revelations have surfaced that over the course of a decade, SEC staff failed repeatedly to investigate credible allegations against the trader. On Tuesday, SEC Chairman Christopher Cox ordered the agency's inspector general to determine what went wrong.

Gensler will be in charge of the CFTC, an independent agency created by Congress to regulate trading in the commodity futures and option markets.

Tarullo is leading Obama's transition team at the Treasury Department. His appointment to fill an open Fed seat must be approved by the Senate.

"These individuals will help put in place new, common-sense rules of the road that will protect investors, consumers, and our entire economy from fraud and manipulation by an irresponsible few," Obama said.

As a member of the Fed board, Tarullo would have an important voice in deciding crucial policy to help jolt the economy back to life.



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