Democrats push SEC nominees on corporate political spending

(Reuters) - Democrats in the Senate made a concerted push on Tuesday during a confirmation hearing for nominees to the Securities and Exchange Commission to require corporations to disclose political contributions.

The U.S. Securities and Exchange Commission logo adorns an office door at the SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst

Senator Charles Schumer of New York threatened to vote against confirming the nominees, Lisa Fairfax and Hester Peirce, if they did not clearly state support for requiring corporations to make their political donations public.

“The SEC is certainly not responsible for patching that hole in our campaign finance system, but you can help prevent that hole from being ripped any wider,” Schumer said. “Shareholders remain in the dark as executives of public corporations funnel money into our political system with no transparency or accountability.”

Other Democrats, including Senator Robert Menendez of New Jersey and Senator Jeff Merkley of Oregon, made similar comments.

The securities regulator has faced mounting pressure to require contributions disclosure from corporations since the Supreme Court struck down strict limits on campaign finance in its 2010 Citizens United decision.

Menendez said 1.2 million people have written to the SEC about the disclosure requirement.

Budget legislation passed by the Republican-majority Congress at the end of 2015 blocked the SEC from creating a rule on political spending.

Peirce, a Republican who is a senior fellow at the Marcatus Center at George Mason University, noted the SEC is charged with carrying out laws and said she would not undermine the budget legislation if she is confirmed.

Fairfax, a Democrat who is a law professor at George Washington University, said she would uphold the budget law. She added, though, that she believes political spending could be material information to shareholders making investment decisions.

Peirce and Fairfax were nominated by President Barack Obama in October, and Tuesday’s hearing was the first step in confirming the nominations.

Republican Senator Richard Shelby of Alabama, the committee’s chairman, said he expected the nominations to come to the floor for a vote.

Still, the confirmations could stretch on for a while given the political divide in Congress and the debate about financial regulation in the presidential election.

The divide has made confirming nominees difficult. Senator Sherrod Brown, a Democrat from Ohio, noted Obama sent the committee 19 nominations to consider in the past 15 months and it approved only one.

Meanwhile, the hearing turned to issues that are taking center stage in the presidential campaigns.

Senator Elizabeth Warren, a Massachusetts Democrat who advocates for financial regulation, pressed Peirce about her public criticism of the Dodd-Frank Wall Street reform law put in place after the financial crisis. Many Republicans consider the law a regulatory overreach, while some Democrats view it as a way of preventing another crisis.

“What you propose, from what I can tell in your writings, is less oversight of big banks, fewer efforts to reign them in, more chances for them to take on big risks to boost their profits and, if things go wrong, come crying to the government for another bailout,” Warren said. “The question is whether someone should be put in charge of enforcing laws that they think are unnecessary or counterproductive.”

Peirce said she would implement the law as a commissioner. She added that she made her critiques as an academic and not a regulator.

Senator Mike Rounds, a Republican from South Dakota, brought up the issue of gun ownership and pushed Fairfax about an amicus brief she signed that questioned WalMart’s gun sales.

Fairfax said she was not sending “a signal about the underlying issue” but signed the brief to say companies must communicate corporate policies to investors.

Reporting by Lisa; Editing by Dan Grebler