So much for policing Wall Street. During the 2016 presidential campaign, Donald Trump criticized Hillary Clinton's ties to Wall Street and said he would not "let Wall Street get away with murder." But since winning the election, Trump has proved to be what some investors are calling the "best thing to happen to big banks."
Trump named Wall Street lawyer Jay Clayton to lead the Securities and Exchange Commission, and Clayton is expected to be confirmed by the Senate as early as next week. In early April, the Senate Banking Committee approved Clayton 15-8 to advance his nomination.
Clayton is a longtime partner at the law firm Sullivan & Cromwell and has represented big banks (Goldman Sachs, Barclays, Deutsche Bank) and corporations (UBS, Volkswagen). As the SEC chief, he could face possible conflicts of interest overseeing the independent agency that regulates Wall Street and financial markets.
Sen. Elizabeth Warren, D-Mass., pointed out the potential conflicts and raised concerns about Clayton's nomination during his Senate hearing in March:
A big part of the job of the chairman of the SEC is enforcement -- a cop on the beat on Wall Street. You've said in your testimony today that you intend to enforce the law strictly, and I very much agree with that goal. But I'm concerned that you won't be able to achieve it.
The SEC chair will play a critical role in deciding what the enforcement position of the SEC will be. And in recent history, Republican commissioners on the SEC have favored weaker enforcement, while Democratic commissioners have sought tougher enforcement. The chair is often the deciding vote, and, of course, if the chair can't vote, and the remaining SEC commissioners split along party lines, then major enforcement actions don't go forward, and serious wrongdoing may go unpunished. So it's important to think about how often the SEC could be caught in such a deadlock.
Under the president's executive order for ethics, the first two years of your tenure as SEC chairman, you would have to recuse yourself from participating in any enforcement matter involving a former client of yours. That's about half of your term as chair.
Clayton defended his work and said enforcement would not be a problem with him as SEC chair.
Watch the exchange with Warren and Clayton below.
Watch Clayton's full SEC chair nomination hearing here.
—Posted by Eric Ortiz