* Krawcheck has had discussions with lawmakers for months
* Other job options include Treasury, CFPB, source says
* Wants a job involving investor advocacy issues-source
* Record of seeing clients' perspective, say ex-colleagues
By Jessica Toonkel
NEW YORK, Dec 3 Sallie Krawcheck has been
quietly raising her profile in Washington. For six months the
former executive at Bank of America and Citigroup
has been meeting with lawmakers on both sides of the aisle,
offering her insights on a variety of issues including "too big
to fail banks" and money market fund reform.
Krawcheck, 48, who was ousted from senior jobs by both banks
in recent years, had already sought to distance herself from
Wall Street "fat cats" through op-eds, social media posts and TV
appearances that have positioned her as an investor advocate.
It all helps to explain why there has been speculation in
the media in recent days that Krawcheck has become a contender
to be chairman of the U.S. Securities and Exchange Commission,
after last week's announcement that current head Mary Schapiro
will soon be stepping down. President Barack Obama named SEC
Commissioner Elisse Walter to take over the regulator as
chairman designate but he will need to either renominate her
next year or find someone else as a permanent replacement.
To some, talk of Krawcheck as a candidate came as a surprise
given her background as a former executive at banks that needed
to be rescued by the government and her lack of Washington
And one person familiar with her thinking said that
Krawcheck's efforts over the past few months were not
necessarily intended to position her for a shot at the top SEC
job. Rather, after getting fired from Bank of America, Krawcheck
decided that whatever she does next she wants to get a job that
addresses investor advocacy issues.
But others say the SEC job would fit with her views and
"She has always been willing to take controversial views and
she gets the industry," said Gary Black, global co-chief
investment officer at Calamos Asset Management, who worked with
Krawcheck when she was at research house Sanford C.Bernstein,
and keeps in touch with her. "She brings a practical view on how
to regulate the industry."
New York Senator Charles Schumer, a senior Democrat on the
Senate banking and finance committees, has been a prime target
for Krawcheck's overtures, sources say. He could be a key ally
if Krawcheck is seriously considered for the SEC job or another
"ISN'T AN ACT"
People who know or have worked with Krawcheck say the
investor's friend persona isn't an act.
"She has been an advocate for clients as long as I've known
her," said Lyle LaMothe, a wealth management consultant who
retired as head of Bank of America's Merrill Lynch brokerage in
2011 after 24 years with the firm. "When we would be in
executive session, once we got through the business of the day
the final question (she asked) was, 'Is this in the best
interest of the client?'"
Early on in her career as a commercial banking analyst at
Bernstein, Krawcheck was known for being candid about her views,
even if they were not popular.
In 2002, Krawcheck, who by then was chairman and CEO of
Bernstein, was featured on the cover of Fortune magazine for a
story about the search for the "last honest analyst."
"She is not a 'yes' person," said Eric Stoclet, an executive
director in London at Forum Partners Investment Management who
was an executive for Citi's private bank in London from
2004-2006. "She did quite a good job at Citi with some very
Her candidness has put her at odds with superiors. In 2008,
Krawcheck, as head of Citi's wealth unit, clashed with then CEO
Vikram Pandit over how to reimburse clients who bought hedge
funds that turned out to be toxic and who owned auction rate
securities they were unable to liquidate. Krawcheck argued for
paying investors back and suggested making zero percent loans to
those clients, a person familiar with the situation said. Within
months, she was out.
As head of Bank of America's wealth management unit,
Krawcheck praised a controversial plan that would hold
commission-based brokers to the same higher ethical standards as
fee-based financial advisers - an idea that could drastically
affect Merrill's bottom line. She bristled at Wall Street's
efforts to derail the idea.
"Regulators are upset with us, the public is irate with
us...and some number is bewildered by us...Rather than focus on
each other, we should shift our focus to our clients," she told
attendees of a Securities Industry and Financial Markets
Association's private client conference in April 2010.
She was ousted at Bank of America by CEO Brian Moynihan as
part of a reorganization in September 2011.
The SEC is not seen as the only option. Some have suggested
that Krawcheck might want to cut her teeth in Washington in a
mid-level position at the U.S. Treasury Department or in a
senior role at the new Consumer Financial Protection Bureau,
according to the person familiar with Krawcheck's discussions
It is unclear whether Krawcheck is a serious contender for
the SEC post. Other possible contenders include Richard Ketchum,
head of the Financial Industry Regulatory Authority, and Walter,
who can remain in the post through December 2013 without needing
Krawcheck, often named among the most powerful women in
banking, has kept a lower profile since her name was mentioned
as a candidate to run the SEC. Her last tweet - on the wisdom of
a money market reform proposal from the head of retail brokerage
Charles Schwab - came at 10:30 a.m. ET last Monday, just minutes
after the SEC officially announced Schapiro's departure.
Krawcheck may be a hard sell for the Obama administration,
given that two of her former employers were big contributors to
the U.S. financial crisis. She was also chief financial officer
at Citigroup at a time when it increased its leverage
significantly, and she has been a beneficiary of Wall Street's
multi-million dollar signing bonuses and departure packages for
What's more, a lack of regulatory experience may hurt her
chances of getting the SEC post - though former SEC head Arthur
Levitt didn't have any when he took the helm.
"ALWAYS HAS A PLAN"
Still, many who have worked with her say Krawcheck was a
smart, analytical and competent executive who not only knew the
business, but was good at building consensus among different
units of companies. She helped restore brokerage Smith Barney's
reputation at Citigroup and was popular with many of the
financial advisers at Merrill Lynch.
Schumer and other lawmakers contacted by Reuters did not
return calls or requests for comment about meetings with
Krawcheck or their thoughts about her.
In the end, of course, Krawcheck may not land in Washington
at all, two people who know her said.
She has had discussions about a variety of roles with
several companies, one source said.
"She has lots of balls in the air," said the source, who
asked not to be named because the conversations were private.
"Sallie always has a plan."