SEC chair nominee Mary Schapiro is getting pretty roughed up ahead of her nomination hearings Thursday. The Wall Street Journal analyzes her record as a regulator during her years at the NASD and FINRA and just as I wrote a couple of days ago, she doesn’t come off as particularly tough. The WSJ highlights that FINRA may be just as responsible as the SEC for missing l’affaire Madoff as well as the mispriced mortgage securities in Lehman’s brokerage accounts and the soft underbelly of the auction-rate securities market.
Congressmen may decide to get tough in her confirmation hearings despite all the good will that ushers President-elect Obama into Washington. It’s only days before the inauguration, but some of his Cabinet and regulatory picks are starting to look a little shopworn. The reputation of NY Federal Reserve Timothy Geithner, nominated to the top job at Treasury, is taking a licking after it was revealed that he skipped on taxes during his years at the International Monetary Fund. Odds are that Geithner would have gotten a little roughed up in any event: He was a critical part of the team that took down Lehman and helped cobble together the much-maligned series of financial bailouts on Wall Street.
Geithner and Schapiro will probably get the votes they need to join the Obama administration. But after all the bad press, they will need to show greater vision than they have to date. Or perhaps they — and everyone else in this country — are counting on Obama himself to provide the vision.