Joe Biden’s presidential transition has barely started but already banks and investment firms are anxious about two names they fear are in the running to lead the U.S. Securities and Exchange Commission.
The uneasiness started late last week, when news broke that Gary Gensler -- a scourge of Wall Street when he led the Commodity Futures Trading Commission -- had been tapped to examine financial regulators for the president-elect. That fueled concerns that Gensler himself might be in line for the top job at the SEC or another agency he’s reviewing.
Then Washington lobbyists and industry trade groups got wind of another SEC contender who they would find potentially more alarming: Preet Bharara, Manhattan’s former top federal prosecutor. Bharara loomed large over Wall Street in the decade following the 2008 financial crisis, when he aggressively investigated insider trading and contributed to SAC Capital Advisors, Steven Cohen’s old hedge fund firm, shutting its doors.
Biden’s transition team didn’t respond to requests for comment, nor did Gensler or Bharara.
Gensler and Bharara are among many names Biden advisers are discussing as possible SEC candidates, according to more than a dozen people familiar with the conversations who asked not to be named in sharing private communications. But the deliberations are in their early stages and Biden has suggested he may not even start offering nominees for higher-profile cabinet positions -- like Treasury secretary and attorney general -- until next month.
Still, the financial industry chatter about an SEC pick highlights the job’s importance to banks, asset managers and stock exchanges.
Wall Street was already on edge over the internal battle over appointees between moderate and progressive Democrats, worried that liberal Senator Elizabeth Warren and other lawmakers would pressure Biden to select tough regulators. Those fears grew when the president-elect filled his landing teams -- aides who examine federal agencies -- with several industry critics. While Biden has said little about his plans for financial regulators, the move signaled he’s open to nominating candidates in the mold of Gensler and Bharara.
One preferred candidate among progressives, according to people familiar with the matter, is former SEC Commissioner Kara Stein, who clashed with Wall Street banks during her tenure. Allison Lee, a current SEC commissioner who’s likely to become acting chair under Biden, is also favored by some liberal Democrats to get the post permanently.
Michael Barr, a former top aide to ex-Treasury Secretary Timothy Geithner, is in the mix, too, according to two people familiar with the matter. Barr, who was one of the main authors of the Dodd-Frank Act, gained a reputation during the Obama administration as an unyielding negotiator who often dismissed Wall Street’s lobbying demands. The University of Michigan law professor is also on the Biden transition group reviewing the Treasury Department.
Georgetown University Law Professor Chris Brummer, whose work has focused on global regulatory issues, financial inclusion and industry innovation, is also said to be in the running. Brummer, who would be the first African-American SEC chairman, recently published a study about the lack of diversity among U.S. regulators. Like Barr, Brummer is part of the team examining the Treasury Department for Biden.