President-elect Donald Trump has announced that he will nominate Jay Clayton to the position of Securities and Exchange Commission chairman.
The Securities and Exchange Commission, often abbreviated as the SEC, is the agency responsible for policing Wall Street and protecting investors from unfair practices. If approved, Clayton would be replacing Mary Jo White, and he would likely be dramatically rolling back regulations on Wall Street put in place since the 2008 collapse.
Here’s everything you need to know about the potential new chair of the SEC.
1. He Is a Lawyer Who Has Represented Wall Street Banks
Jay Clayton’s background includes years of defending some of Wall Street’s top banks. He’s a partner at Sullivan & Cromwell and has in the past represented Goldman Sachs and Barclays, defending them against regulators.
His nomination immediately drew criticism from Democrats, including from Hillary Clinton’s former press secretary Jesse Ferguson, who tweeted, “I’m sure Trump campaigned on appointing a Wall Street attorney who represented Goldman Sachs to oversee Wall Street at SEC, right?”
In a statement, President-elect Trump said,“ Jay Clayton is a highly talented expert on many aspects of financial and regulatory law, and he will ensure our financial institutions can thrive and create jobs while playing by the rules at the same time…”
Clayton has not had any prior experience in government.
2. He Is the Fourth Trump Appointee With Ties to Goldman Sachs
During the presidential election, Donald Trump criticized Hillary Clinton for giving speeches to Wall Street banks like Goldman Sachs, accusing her of being in their pocket and pressuring her to release the transcripts of these speeches. But now, four members of Trump’s cabinet have some sort of ties to Goldman Sachs, one of the banks heavily involved in the subprime mortgage crisis of 2008.
First, there’s Steven Mnuchin, Trump’s nominee for Treasury secretary and a 17-year veteran of Goldman Sachs. Then there’s Steve Bannon, Trump’s senior counselor who previously worked as an investment banker at Goldman Sachs. Third is Gary Cohn, Trump’s pick for director of the United States National Economic Council and a top executive at Goldman Sachs who has worked at the bank since 1990. Finally, fourth would be Jay Clayton.
There are also a few other Trump appointees who haven’t worked for Goldman Sachs but have some other experience in banking or finance. Elaine Chao, Trump’s pick for secretary of transportation, is on the Board of Directors at Wells Fargo; Todd Ricketts, Trump’s pick for deputy secretary of Commerce, has worked for Incapital and Knight Securities; Wilbur Ross, Trump’s nominee for secretary of Commerce, is a former banker who has worked for N M Rothschild & Sons; and Betsy DeVos, Trump’s pick for Education secretary, is chair of Windquest Group, an investment management firm.
3. He Has Expressed Concern Over Cybersecurity Threats
Clayton has had a number of articles published, including one from Wharton University of Pennsylvania in which he, along with nine other co-authors, argues that the United States must take immediate steps to protect itself from cybersecurity threats. It was published in June 2015.
“Cyber risk is now a systemic threat to national security, economic sustainability, safety, public confidence, and to the freedoms that constitute our way of life,” the piece reads. “The occurrence of a large catastrophic and systemic attack is no longer a matter of “if”, only when and how costly — to life, property, reputations, the economy, and our overall sense of confidence and security.”
This article also makes the argument that the president and Congress should appoint a Cyber Threat Commission and produce a cybersecurity report, similar to how the federal government responded to the September 11th terrorist attacks.
4. He Advised Barclays Capital During Its Aquisition of Lehman Brothers
Clayton’s background includes advising corporations on major acquisitions, one of the most noteworthy being Barclays Capital’s acquisition of Lehman Brothers assets in 2008.
In September 2008, Barclays Capital acquired Lehman Brothers assets for $1.75 billion after Lehman Brothers declared bankruptcy amid the subprime mortgage crisis. This $1.75 billion figure was significantly lower than Lehman was hoping for – they expected at least $5 billion – and it included the acquisition of their building in Midtown Manhattan.
“Barclays have long been trying to establish themselves on Wall Street and Lehman’s demise offers an opportunity they’re not willing to miss,” Angus Campbell, head of sales at Capital Spreads, told The New York Times at the time.
A statement released by President-elect Trump’s transition team today emphasizes this element of Clayton’s career, saying, “Clayton has had a long and distinguished career advising on public and private mergers and acquisitions transactions, capital markets offerings, regulatory and enforcement proceedings, and other matters.”
5. Donald Trump Has Spoken Out Against Wall Street Regulations
It’s not totally clear at this time where Jay Clayton stands on issues of Wall Street regulation, but the press release from the president-elect’s office certainly makes it sound as if Clayton will be tasked with rolling back regulations rather than cracking down on Wall Street in any significant way. Trump in the statement says that the U.S. needs to “undo many regulations which have stifled investment.” And in the statement, Jay Clayton says that he will “set policy that encourages American companies to do what they do best: create jobs.”
However, the press release does say that “[r]obust accountability will be a hallmark of [Clayton’s] tenure” and that Clayton will provide “strong oversight of Wall Street.”
Trump in the past has repeatedly expressed his opposition to regulating Wall Street, even before he began running for office.
“I think regulation, all it does is make a bad banker probably worse, if you think about it,” Trump said in a May 2012 interview, according to CNN. “I think the regulations are not good. Dodd-Frank stops — you try and go out if you’re starting a business, you try and go to a bank and get money, they’re afraid to loan it.”
In another interview from March 2011, Trump said, “We have to take away some rules and regulations.”