A former U.S. Senate Banking Committee lawyer has emerged as the leading candidate for a Republican seat on the Securities and Exchange Commission, people familiar with the matter said.
Hester Peirce, a senior research fellow at George Mason University’s Mercatus Center, would fill the slot held by departing Commissioner Daniel Gallagher. She is a well-known critic of the government’s Wall Street bailout and the regulatory expansion passed in the wake of the financial crisis.
If confirmed, Peirce would become the third SEC commissioner with a background of working in the Senate. Some critics have charged that the practice of appointing congressional aides has led to increased partisan conflicts and slowed the adoption of new regulations at the five-member commission.
Peirce’s policy views are similar to Gallagher’s, and her nomination would provide continuity on the Republican side of the commission. The White House is also looking to name a new Democrat as a replacement for Luis Aguilar, whose term is expiring.
While SEC commissioners are nominated by the president, the two minority members are usually picked by Senate Republican leaders. Peirce’s former boss, Senate Banking Committee Chairman Richard Shelby, is pushing for her nomination, and Majority Leader Mitch McConnell is likely to accept the choice, said the people, who asked for anonymity because the decision isn’t final and could still change.
Peirce, 44, declined to comment, as did spokesmen for McConnell and Shelby.
While working for Shelby, of Alabama, Peirce helped draft a Republican alternative to the 2010 Dodd-Frank Act. She also monitored how the SEC and other agencies implemented the law.
Before working on Capitol Hill, Peirce spent eight years at the SEC as a staff attorney in the investment management division and counsel to ex-Commissioner Paul Atkins. She graduated from Case Western Reserve University and has a law degree from Yale University.
As an academic, Peirce has testified before Congress and written numerous articles criticizing Dodd-Frank. She was editor of the 2012 book, “Dodd-Frank: What It Does and Why It’s Flawed.”
Appearing before a House Financial Services subcommittee last month, Peirce (pronounced purse) said the law needs to be reconsidered.
While poor regulation helped cause the market meltdown, Dodd-Frank made “regulators even more important movers and shakers in the financial system,” she said. “They are determining how financial firms are structured, what activities they are engaged in and how they are funded.”
On the Democratic side, the White House has met with corporate attorneys Keir Gumbs and Philip Khinda about replacing Aguilar, people familiar with the matter said. Aguilar’s term ends this week, but he is expected to stay until a replacement is confirmed.
Those potential nominees, however, have sparked protests by some liberal groups. One advocacy group, Credo Action, launched an Internet petition opposing the candidacies. It argues that Gumbs and Khinda aren’t “proven reformers.”
Bartlett Naylor, financial policy advocate at Public Citizen, said his group is supportive of the effort. “With respect to the names that have been floated so far, we are the opposite of enthusiastic,” he said.
Both Gumbs and Khinda worked at the SEC earlier during their careers. Gumbs is a partner at law firm Covington & Burling in Washington, and Khinda is co-head of the securities enforcement practice at Steptoe & Johnson.
Along with Peirce, current Commissioners Kara Stein and Michael Piwowar also worked for the Senate Banking Committee.
— Check out Time to Reform FINRA: Mercatus Paper on ThinkAdvisor.