Who is Mary Schapiro?:
Ms. Schapiro was appointed in January 2009 by President Obama as the 29th Chairman of the Securities and Exchange Commission (SEC). She is the first woman to hold this post. CEO of the Financial Industry Regulatory Authority, (FINRA) the largest non-governmental securities regulator for U.S. public companies. It is the consolidation of the National Association of Securities Dealers ("NASD") and other regulatory arms of the NYSE. Schapiro was the Chairman and CEO of the NASD. She has also been Chairman of the Commodity Futures Trading Commission and a Commissioner on the SEC.
Why is the SEC Important?:
The is the Securities and Exchange Commission. The SEC regulates the stock market by requiring standardized information about companies is available to investors. It also prosecutes companies that lie about their information. This insures transparency, so that investors know the fair market price of stocks. Transparency instills trust, which keeps the stock market operating efficiently.
Why Did Obama Name Schapiro to Head the SEC?:
Barack Obama appointed Ms. Schapiro to enforce regulations for hedge funds and products such as Collateralized Debt Obligations and Mortgage-Backed Securities. It was the unregulated use of such derivatives that helped caused the bubble and subsequent bust that led to the current recession. Increased SEC regulation is a large part of Obama's administration, and is needed to restore confidence in the financial sector and the economy.
The SEC is also criticized for not catching the Bernard Madoff Ponzi scheme.
Mary Schapiro was an SEC Commissioner from December 1988 to October 1994, giving her experience in securities regulation under several administrations. She was initially appointed by President Reagan, reappointed by President George H.W. Bush in 1989, and named Acting Chairman by President Bill Clinton in 1993. She has the reputation for being a tough regulator. This has helped instill confidence in the markets again. She is also supported politically by powerful Congressional leaders, such as Senator Charles Schumer (D-N.Y.) (Source: Forbes, "Is Schapiro Enough for the SEC?" December 19, 2008)
In 2010, Dodd-Frank Wall Street Reform Act doubled the SEC budget, and gave it the authority to increase the rules and regulations over Wall Street. However, the Republican majority in the House of Representatives rejected the budget increases, even though the SEC is funded by industry fees. Congress also criticized the SEC's additional regulatory authority.
Schapiro Controversy:
Some experts criticized her appointment because she has been connected to the financial industry for her career, possibly tainting her objectivity. She was also criticized for appointing Mark Madoff, son of soon-to-be disgraced financier Bernard Madoff, to the board of the National Adjudicatory Council of FINRA in 2001 while she was that organization's president.
In 2011, she was investigated by the SEC's inspector general for approving a $557 million lease for office space. It overestimated the amount of space needed, and was not awarded competitively. In addition, the SEC leased the space before Congress approved funding for an expansion in staff, and a document justifying the lease was prepared a month after the deal was finalized, then backdated.
Other experts say some of these SEC probes could be politically motivated to keep prevent further Wall Street regulations.
Background:
Ms. Schapiro is a member of the International Organization of Securities Commissions (IOSCO). She graduated from Franklin and Marshall College in 1977, and received here law degree from George Washington University in 1980. Her awards and honors include the Financial Women’s Association Public Sector Woman of the Year (2000) and the Visionary Award from the National Council on Economic Education (NCEE) in 2008.
