Elizabeth Warren and her liberal allies appear to be on the verge of another victory in their battle to stop the White House from choosing financial regulators with ties to Wall Street.
President Barack Obama was planning to nominate corporate attorney Keir Gumbs to fill a Democratic seat on the Securities and Exchange Commission last month, according to four sources familiar with the matter. But now that’s on hold at least until August after activist groups aligned with Warren raised an outcry over Gumbs’ work, including his advice to companies on how to dodge scrutiny from shareholder activists.
The White House will begin vetting additional candidates who don’t have corporate relationships to fill the seat being vacated by Democrat Luis Aguilar, whose term expired last month, two people said.
It’s the latest attempt by the progressive movement that’s coalesced around Warren to set a litmus test for financial regulatory jobs. In January, banker Antonio Weiss withdrew his name for nomination to a Treasury post after Warren and others criticized his background on Wall Street.
With the five-member SEC divided along partisan lines, liberals want to ensure the two Democratic commissioners won’t compromise on rules governing everything from shareholder activism to executive pay.
Warren’s office did not respond to requests for comment. The White House and Gumbs, a former SEC staffer who is now a partner at law firm Covington & Burling LLP, declined to comment.
The nomination battle comes as Warren and activist groups have been turning up the heat on the SEC. The Massachusetts senator last month wrote a scathing public letter to Chair Mary Jo White, accusing her of being soft on financial enforcement. Two weeks later, activist groups launched a website — nomoremaryjos.com — and sent Obama a letter criticizing the revolving door between Wall Street and the SEC.
At the SEC for six years, Gumbs worked for Commissioner Roel Campos and in the division of corporate finance. If nominated and confirmed, he would be the SEC’s first African-American commissioner in more than a decade.
Activist groups such as Public Citizen have objected to Gumbs’ work representing the American Petroleum Institute before the SEC and his work involving corporate campaign-spending disclosure, a contentious issue for the SEC since the Supreme Court’s Citizens United decision in 2010.
Warren, other Democrats, and labor unions have been urging the SEC to require companies to reveal their political spending through nonprofits and political-action committees after Citizens United allowed independent groups to raise and spend unlimited campaign contributions. In 2013, Warren called on her supporters to “harass” the agency into implementing a disclosure rule.
Earlier this year, Gumbs and his colleagues at Covington wrote an article advising companies on how to deal with activist shareholders who are pressuring them to voluntarily reveal their political spending.
Though Aguilar’s term expired last month, he can continue to serve through 2016. The opening for a Democrat comes at the same time that a Republican commissioner, Daniel Gallagher, has announced plans to step down. New commissioner appointments traditionally pair Democrats and Republicans to ease the Senate confirmation process.
The top choice of Senate Republicans is Hester Peirce, a researcher at the conservative-leaning Mercatus Center at George Mason University, who would replace Gallagher, sources have told POLITICO.
Progressives’ preferred candidate is said to be Jennifer Taub, a professor at Vermont Law School who has written critically of regulatory relief for Wall Street.
The nomination delay could further disrupt the work of the SEC, which has been struggling amid partisan fighting to write new rules.
“It would be extremely difficult for the SEC to move forward on any of the items on its plate if there is not a full complement of commissioners,” said a financial industry lobbyist who follows the agency.