Trump’s SEC Chair Nominee Softens Position on Dodd-Frank Act
Jay Clayton, President Donald Trump’s nominee for Chairman of the Securities and Exchange Commission, has no “specific plans to” attack the Obama administration’s financial reform law, Dodd-Frank, he said Thursday during his Senate confirmation hearing.
Prior to his hearing, Clayton was expected to play a key role in the president’s plan to dismantle the financial reform act, according to previous statements. However, he took a more mild stance during the hearing, where he said the law should be looked at to determine whether it is achieving its objectives “effectively.”
Rules and enforcement measures made by the SEC greatly affect auto lenders who securitize on the secondary market in order to gain capital. In particular, the recent adoption of Reg AB II requires auto lenders to disclose asset-level data when issuing.
The commission also ensures that companies are accurately reporting earnings, most recently charging General Motors Co. $1 million to settle charges of deficiencies in its internal assessment of the potential impact that defective ignition switches would have on its financial statements.
Clayton is a partner at one of the largest New York law firms, Sullivan & Cromwell, which has represented a number of large financial institutions such as Goldman Sachs, as well as automakers including Volkswagen AG during its emissions scandal.
Democrats — including Ohio Senator Sherrod Brown and Massachusetts Senator Elizabeth Warren — raised issue with Clayton’s history of representing financial firms. If a case previously represented by Sullivan & Cromwell were to come before the commission, the would-be chairman would have to recuse himself from the case, effectively splitting the vote and weakening the power of enforcement, Warren argued.
“For half of your term (2 years) as SEC chair, you would not be able to punish any corporation or bank that uses Sullivan & Cromwell as their lawyer,” Warren said during the hearing. “You can’t vote to punish some of the biggest names on Wall Street, that means those cases would be at least more likely to end in deadlock — which means those companies would skate free.”
Clayton argued that the commission attempts to vote unanimously on enforcement actions, and thus his recusal, wouldn’t necessarily end in bipartisan deadlock between democrats and republicans.
