Obama nominates two U.S. Senate aides as next SEC commissioners

Pair will work on Dodd-Frank implementation

Kara M. Stein and Michael S. Piwowar, both senior U.S. Senate aides, were nominated by President Barack Obama to join the Securities and Exchange Commission.

Stein would replace Elisse B. Walter as a Democratic commissioner and Piwowar would succeed Troy A. Paredes as a Republican appointee on the five-member commission that oversees the country’s capital markets, according to a news release issued by the White House. Stein has served as a top aide to Senator Jack Reed, a Rhode Island Democrat, and Piwowar has been chief Republican economist on the Senate Banking Committee.

Stein and Piwowar, whose nominations must be confirmed by the Senate, would join a commission adjusting to new priorities under Chairman Mary Jo White, who was sworn in last month. The agency is under pressure to finish rules mandated by the 2010 Dodd-Frank law, which both Stein and Piwowar worked on as Senate staff members.

Their selection provides an opportunity for Democrats to secure a full-term for White, who was confirmed in April for a term ending in June 2014. Senator Tim Johnson, chairman of the banking committee, plans to have the panel vote on all three nominations at the same hearing, according to an aide who asked not to be identified because the decision hasn’t been made public.

Senator Mike Crapo, the top Republican on the panel, has previously said White’s full term could be voted on when the Senate considered other SEC vacancies.

‘Full Strength’

“I look forward to moving both their nominations forward, as well as Chairman White’s full five-year term, to ensure the Commission continues to operate at full strength,” Johnson said in a statement after the nominees were announced May 23.

Senate Majority Leader Harry Reid said this week he would probably schedule full-Senate votes on 15 nominations in July.

Stein, 49, served as staff director of a Senate securities and insurance subcommittee that Reed led from 2009 to 2013. After Reed left the post to lead two other subcommittees, Stein became his senior policy adviser and legal counsel, according to Reed’s office.

If Piwowar is confirmed, he would be the only economist on a five-member commission that historically has been made up of lawyers.

Assisted Dodd

Stein has worked for Reed in a variety of policy roles since 1999, according to Reed’s office. She earned undergraduate and law degrees from Yale University, according to Reed’s office. She also worked for former Senator Chris Dodd, a Connecticut Democrat, and as an assistant professor at the University of Dayton School of Law.

“Kara is a real expert on securities law and a dedicated public servant,” Reed said in a statement. “Her departure will be a loss for my office and a real gain for the SEC and those it protects.”

Piwowar, 45, has “thoroughly demonstrated his understanding of these complex issues” during his time as a Senate aide and, previously, a White House economic adviser, Crapo said.

“Both of their experiences will serve them well as they work to fulfill the SEC’s mission of protecting investors and ensuring a fair marketplace,” said Johnson, a South Dakota Democrat.

Walter, whose term has expired, can serve until the end of the year. Paredes’ term expires in June, and the former law professor has told people he is eager to return to academia.

Economic Analysis

Piwowar, who also previously worked as a staff economist at the SEC, holds a Ph.D in finance from Pennsylvania State University. He would join the commission as it seeks to improve its use of economic analysis in rulemaking.

“He’ll be fair, but he’ll of course bring his perspective to the problem, a perspective that is closely aligned with Republican ideology,” said Larry Harris, a former SEC chief economist who collaborated on research papers with Piwowar.

“It’s essential the commission has access to people who understand economic issues well, and as an economist he does,” added Harris, who is a professor of finance and business economics at the University of Southern California Marshall School of Business.

Neither Stein nor Piwowar returned a phone message seeking comment.

The U.S. Court of Appeals for the District of Columbia Circuit cited inadequate economic analysis when it invalidated an SEC rule in July 2011 that sought to make it easier for shareholders to oust board members.

‘Good Pairing’

Barbara Roper, director of investor protection for the Consumer Federation of America, said Stein and Piwowar appear to be “a very good pairing for investors.” Roper, who has worked with Stein over the years, said Stein guided Reed’s examination of high-frequency traders and other market-regulation questions. Stein also helped lead the subcommittee’s work on derivatives regulation, investor protections and accounting.

“Given the importance of those issues, that is something she’ll bring,” Roper said. “She is just really solid and an outstanding selection. It’s very encouraging.”

Stein and Piwowar should have no trouble getting Senate confirmation due to their experience as staff members, said Mark A. Calabria, a former Republican banking committee aide who worked with both of them.

The pair also could bridge some divides at the commission, which sometimes has voted along party lines, Calabria said.

“You are going to have a Republican and a Democrat on the commission who know each other and have a working relationship,” said Calabria, now director of financial regulation studies at the Cato Institute.

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