“Whether it’s being Chairman of the SEC or President of the United States, the problems that you’re going to have to confront aren’t the ones that you may necessarily have planned on confronting. They may not be the ones you’re good at. What you’d better be ready to do is accept that that’s part of the job, and accept that the criticism is going to go along with it, and that you’re going to have to make some people angry, and that you may be proven, in retrospect, in part to have been wrong.”
In March 2008, just before the financial crisis emerged, SEC Chairman Christopher Cox had cautioned staff that no independent agency lasts forever, citing the example of the Interstate Commerce Commission, founded as the first independent agency in 1887 and dissolved in 1996. As 2009 began, questions rose whether the U.S. Securities and Exchange Commission would also close. But President Barack Obama signaled his commitment to a renewed SEC with his appointment of Mary Schapiro, FINRA Chief Executive Officer and a former SEC Commissioner, as Chair. “Mary understood that the Commission had to move first, or Congress would do so in a way that harmed the SEC as an institution. If the SEC came forward and was thoughtful, we could argue to Congress that we had things under control.”73
The agency retained its mandate with the passage of the Dodd-Frank Act of 2010 in response to the financial crisis. “Dodd-Frank, ironically, is more about what it didn’t do to the SEC than what it did to the securities laws. It didn’t put the SEC out of business.” But the Dodd-Frank Act put a strain on the SEC staff. “Our political position was significantly weakened by Madoff. But the morale of the agency was seriously shook by Dodd-Frank.”74
Schapiro recognized the need for transformation within the agency. As she prepared to leave office in 2012, she noted, “I am proud that our staff have already made this one of the most productive periods in the agency’s history. Just as important is a cumulative effect of individual accomplishments through our fundamental approach in improvements in culture, management approach and attitude, changes that will allow the SEC to continue at the same high level in the years ahead regardless of the challenges that arise. The burst of activity isn’t just a result of circumstances or a reaction to the financial crisis. It’s an indication that the SEC is evolving in step with the rapidly-changing markets.” Elisse Walter, who would succeed Schapiro as Chair, remembered, “Mary’s finest accomplishment is that the SEC still exists because there really was a period of time when it looked like that might not be the case.”75
The next President of the United States will have an economic regulatory policy and a view of how independent agencies should work, and thus will impact the U.S. Securities and Exchange Commission’s leadership and activism going forward. As President Franklin Roosevelt stated in a 1938 message to Congress: “The people, in and out of the halls of government, who encourage the growing restriction of competition either by active efforts or by passive resistance to sincere attempts to change the trend, are shouldering a terrific responsibility. Consciously or unconsciously, they are working for centralized business and financial control. Consciously or unconsciously, they are therefore either working for control of the government itself by business and finance or the other alternative – a growing concentration of public power in the government to cope with such concentration of private power.”76
(73) March 13, 2008 SEC Atlanta Regional Office gathering in commemoration of SEC 75th anniversary; June 7, 2016 Interview with Robert Plaze
(74) July 1, 2013 Interview with David B.H. Martin; June 7, 2016 Interview with Robert Plaze
(75) Mary Schapiro, June 7, 2012 “A Creative Irritant: The Relationship between the SEC and Accounting Standard Setters,” 13th Annual Meeting; May 9, 2014 Interview with Elisse Walter
(76) April 29, 1938 Message of President Franklin D. Roosevelt to Congress on economic policy
