Mary Jo White Doesn’t Expect Big Regulatory Changes Under Trump Admin

Former Securities and Exchange Commission chair Mary Jo White doesn’t expect to see any big regulatory changes under the Trump Administration, though she does believe there will be a “change in philosophy.”

Speaking before an audience of top corporate and Big Law attorneys at Bloomberg Law’s Big Law Business Summit on Wednesday, White said she doesn’t expect enforcement actions to dip significantly, and she predicted the Financial CHOICE Act, which aims to replace the 2010 Dodd-Frank Act and roll back many of its provisions, likely won’t make it further than the House of Representatives, where it was introduced by GOP legislators in late 2016. The bill would repeal the Volcker Rule and weaken the Consumer Financial Protection Bureau, among other things. It was backed by the House Financial Services Committee in early May.

“I think whatever change happens is going to come several years down the road by virtue of how the regulators carry out their jobs with a different kind of philosophy,” said White, now a senior chair of Debevoise & Plimpton. “But it’s both uncertain where the administration is actually going to land on policy, and then there’s uncertainty as to whether they can bring that about.”

She added, however, that regulators might act differently under the “new philosophy,” “even if there aren’t legislative and regulatory changes.”

White was joined on stage at the BLB Summit by Stephen Cutler, vice chairman of JPMorgan Chase and former head of the SEC’s enforcement division, who also said he doesn’t expect radical changes in financial industry regulation or enforcement under the new Republican government. The two were interviewed by Bloomberg TV anchor David Gura.

[caption id="attachment_50853" align="aligncenter” width="462"][Image “Stephen Cutler, vice chair, JPMorgan Chase. Photo: Jamie Watts/ Big Law Business” (src=https://bol.bna.com/wp-content/uploads/2017/05/steve-cutler-e1495741983858.jpg)]Stephen Cutler, vice chair, JPMorgan Chase. Photo: Jamie Watts/ Big Law Business[/caption]

“This isn’t gonna be a, ‘Let’s just get rid of the old, and here’s the new,’” he said. “First of all, a lot of the old makes sense, and people recognized that. … You can go two steps too far in deregulating, and I have told colleagues, be careful. Make sure that you’re not advocating for a form of deregulation that’s simply going to sow the seeds for more regulation in the future.”

“I think we’re a long way away from accomplishing a significant change in the regulatory agenda even if one were to have that agenda, and it’s not clear to me that it’s as broad-sweeping as a lot of people thought it would be or as a lot of people maybe hoped it would be just several months ago,” Cutler said.

While Cutler and White both said they believe the financial system has benefited from the reforms that came out of the financial crisis, they also said there is some room to roll back or consolidate certain regulations to loosen the burden on corporations and financial firms.

“One of the things we missed a big opportunity on, going back to Dodd-Frank, is regulatory rationalization,” said Cutler. “We used to draw a chart that would have the regulators at the top and our principal businesses at the bottom, and we’d draw lines. We used to call it the spaghetti chart. That’s not something that we’ve solved … but I do think it’s something in the long long run, it’s an issue that we need to address as a country.”

White said the two agencies she is watching for potential changes from are the Federal Reserve Board and the Consumer Financial Protection Bureau, which was established by Dodd-Frank. She added that the “most logical” way to streamline the financial regulatory system would be to combine the SEC and the Commodity Futures Trading commission, but noted that would be politically impossible. “You have two different congressional oversight committees and neither will give up their turf,” she said.

Regardless of any change, White said rulemaking is best left to regulators and not legislators.

“I think the core financial system is much stronger because of many of those rules, but if you look at all the Dodd-Frank mandates, and frankly even the JOBS Act mandates, frankly some of those rules make a lot more sense than others, and yet they’re all mandated to do,” said White. “I would hope that we’ve learned, looking at the CHOICE Act, that you leave to the expertise of the agencies what rules make most sense. I think lots of folks agree with that but you don’t see that being translated into Hill-speak in terms of what’s being proposed as legislation.”

Both former regulators said they were optimistic about the upcoming tenure of Jay Clayton, who was sworn in as SEC chair in early May. Clayton came to the agency from Sullivan & Cromwell, where he advised public and private companies on securities offerings, M&A, corporate governance, and regulatory and enforcement proceedings. “He’s a terrific choice,” said White.

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