October 14, 2016 / 10:05 AM / 3 years ago

U.S. Sen. Warren urges Obama to fire head of SEC

WASHINGTON (Reuters) - U.S. Senator Elizabeth Warren, a proponent of strong financial regulation, turned up the heat on the country’s top securities regulator on Friday, urging President Barack Obama to fire Securities and Exchange Commission Chair Mary Jo White.

U.S. Senator Elizabeth Warren (D-MA) questions Wells Fargo CEO John Stumpf (not pictured) during his testimony before a Senate Banking Committee hearing on the firm's sales practices on Capitol Hill in Washington, U.S., September 20, 2016. REUTERS/Gary Cameron

Warren, a Democrat, has often criticized White in the past, but this was the first time she has called for her ouster.

She made the call in a 12-page letter to Obama, saying she was exasperated with the SEC’s stalled work on a rule to require corporations to disclose money they contribute to political campaigns.

White “has refused to develop a political spending disclosure rule despite her clear authority to do so, and despite unprecedented and overwhelming investor and public support for such a rule,” she wrote.

She added that White was undermining Obama’s priorities, failing to uphold the SEC’s investor protection mission, and not carrying out mandates passed by Congress in the wake of the 2007-09 financial crisis.

The Republican-dominated Congress last year included a provision in its budget bill that bars the SEC from requiring companies to disclose political contributions. It included the ban in its recent stopgap spending bill and Democrats are fighting to keep it out of the full budget bill Congress must pass in December.

The letter, sent weeks before the Nov. 8 presidential election, did not persuade Obama, a fellow Democrat.

“The president continues to believe that Chair White is the right leader,” White House spokesman Eric Schultz told reporters on Air Force One, adding the commission has “important regulatory enforcement work to complete.”

Obama chose White, an independent, for the post in 2013.

A spokeswoman for White declined to comment.

Warren wrote that Obama had authority to choose one of the other two commissioners as the new chair. Two seats on the commission are open.

Traditionally, the chair steps down after a national election so the new president can select the head of the independent commission.

Many on Wall Street fear and loathe Warren, due to her work on post-crisis reforms and her sharp words for big banks.

She is campaigning for her party’s presidential nominee, Hillary Clinton. Winning her endorsement was key for Clinton to secure the support of the party’s liberal wing.

“We think Warren is increasing pressure on Hillary Clinton’s campaign to replace White next year if Clinton is elected president, and White decides to stay,” wrote Keefe, Bruyette & Woods analyst Brian Gardner in a research note. “We think the SEC is an agency where Clinton could give Warren a political scalp.”

Democrats want the SEC to finish a 2013 rule proposal for requiring contribution information, saying it will reveal corporations’ influence on political offices and let investors know how their money is spent. Most recently, Warren and other Democrats opposed the nominees to fill the SEC’s vacancies because they would not support a disclosure requirement.

“Whether the move from Senator Warren to prod President Obama to remove her on disclosure grounds is successful, it will certainly pull this rulemaking, and the need to ensure that the final budget package is free of the rider to stymie it, back into the spotlight,” Lisa Gilbert, a director at Public Citizen, a consumer advocacy group, said in an email.

Additional Reporting by Eric Beech in Washington and Jeff Mason Aboard Air Force One; Editing by Peter Cooney and Richard Chang

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