(Bloomberg) -- Mary Jo White, President Obamas choice to run the Securities and Exchange Commission, may be compelled to provide more information about her ties to large banks as senators press her about how she would operate as Wall Streets regulator.
Some Democrats on the Senate Banking Committee who will question White at a nomination hearing say their concerns probably dont threaten her confirmation. White, 65, has said she would retire from New York-based Debevoise & Plimpton LLP, where she has served as a lawyer defending Wall Street, if shes confirmed by the Senate.
She has to make it clear that shes going to be scrupulous about avoiding any potential conflict of interest that would affect her participation in rule-making, Senator Jack Reed, a Rhode Island Democrat, said in an interview. I think she will do that.
White, who was the Manhattan-based U.S Attorney from 1993 to 2002, has had numerous meetings with senators in recent weeks as she faces skepticism about her ties to Wall Street. In her prepared Senate testimony, released today, White doesnt address the issue. She previously pledged to abstain for one year from any SEC matter that involves Debevoise or its clients.
Senator Sherrod Brown, an Ohio Democrat, said last week he wasnt ready to support White for the post.
Ive got concerns about conflicts of interest, Brown said in an interview. I have concerns about her ties to a law firm that have not been cut. I dont understand that.
Retirement Payments
White has said Debevoise would pay her a lump-sum retirement payment within 60 days of her starting at the SEC. The payment would replace her monthly retirement payments for four years. She is eligible for lifetime monthly payments from Debevoise of about $42,500, according to her financial disclosure statement.
Other Democrats, including Senator Mark Warner of Virginia, said in interviews that they are inclined to support White. So far, she has impressed the banking panels Democratic chairman, Senator Tim Johnson of South Dakota.
She has a superb resume and Chairman Johnson was impressed with her in-depth knowledge of the issues and her commitment to taking a balanced approach at the SEC, Sean Oblack, Johnsons spokesman, said in an e-mail.
Whites testimony dwells on market regulation, a topic that hasnt been a large part of her career as a litigator. She singled out high-frequency and algorithmic trading as strategies that demand further evaluation from the SEC.
Investor Impact
There must be a sense of urgency to addressing these issues to understand their impact on investors and the quality of our markets so that the appropriate regulatory responses can be made, White wrote.
White said her first priority would be completing rules required by the Dodd-Frank Act of 2010 and last years Jumpstart Our Business Startups Act. The SEC should consistently consider the economic costs and benefits of new rules from the outset, she wrote.
White said that many other pending regulations await her at the SEC, including a rule to place new restrictions on money- market mutual funds and one that would set a new standard for brokers conduct with customers.
White has spent much of her 38-year legal career at Debevoise, where she earned $2.4 million last year. Her clients have included JPMorgan Chase & Co., Morgan Stanley, and UBS AG. She also represented former Bank of America Corp. Chief Executive Officer Kenneth D. Lewis during an SEC probe of bonuses paid to Merrill Lynch & Co.s executives before Bank of America bought the brokerage.
Enforcement Questions
She could be pressed to explain how shed oversee the SECs enforcement program, said Mark Calabria, director of financial regulation studies at the Cato Institute and a former Republican staff member of the Banking Committee. Her testimony follows recent warnings from Attorney General Eric Holder that the size of the largest financial institutions make it difficult to fully punish them for wrongdoing.
Investors and all market participants need to know that the playing field of our markets is level and that all wrongdoers -- individual and institutions, of whatever position or size -- will be aggressively and successfully pursued by the SEC, White wrote in her testimony.
Senate Republicans havent publicly expressed reservations about Whites nomination. Her history as an attorney for banks could make her more appealing to some Republican senators because it suggests she understands how regulations affect companies, according to Richard C. Breeden, a Republican and former SEC chairman from 1989 to 1993.
Both Sides
They are going to be comforted by the perspective and balance, Breeden said in a phone interview. I wouldnt limit it to Republicans, but business-friendly Democrats as well. Shes got that experience on both sides, which should help her make good decisions.
Senator David Vitter, a Louisiana Republican, has said he intends to press White about how often she would have to remove herself from SEC matters that affect her past clients in the financial sector, Calabria said.
White may not be the main event the hearing. Senators will also question Richard Cordray, Obamas nominee to be director of the Consumer Financial Protection Bureau. Republicans want to restructure the bureaus leadership and gain oversight over its budget before voting on a permanent director.
In a way this probably helps her because senators are going to be focused on him, said Joe Engelhard, senior vice president of Washington-based consultant Capital Alpha Partners and a former Treasury Department official. The only complication I see on her confirmation is her representation of the large banks recently.
