Obama Names Three to Top Economic Posts

 

Published: December 18, 2008

Pledging to create “a 21st century regulatory framework” to protect against future financial crises, President-elect Barack Obama on Thursday nominated three veteran financial regulators to top economic positions in his administration.

We will crack down on this culture of greed and scheming that has led us to this day of reckoning,” Mr. Obama said in announcing the appointments at a news conference in Chicago. “We have been asleep at the switch.”

Later in the day, transition aides said that Mr. Obama had settled on a labor secretary and trade representative and was likely to make those announcements on Friday at his final news conference before heading to Hawaii for a vacation.

In the morning news conference, Mr. Obama named Mary L. Schapiro, 53, to head the Securities and Exchange Commission. The agency has come under sharp criticism for its failure to detect signs that major Wall Street banks were in trouble before the financial crisis, and more recently, for gaps in its oversight of the New York financier Bernard Madoff, who the authorities say has confessed to running a $50 billion Ponzi scheme.

The Madoff scandal, Mr. Obama said, “reminds us yet again how badly reform is needed when it comes to regulations that govern our markets.”

Ms. Schapiro has headed the Financial Industry Regulatory Authority, Wall Street’s self-regulator, since 1996. She has also served as a commissioner of the Securities and Exchange Commission in Republican and Democratic administrations alike.

Mr. Obama also announced the selection of two former Clinton administration economic officials, Gary Gensler and Daniel K. Tarullo, to leading economic posts.

Mr. Gensler, who will head the Commodity Futures Trading Commission, was a Treasury official in the Clinton administration. He also worked as a senior adviser to former Sen. Paul Sarbanes, a Maryland Democrat, who wrote legislation to increase oversight of the accounting industry and reform corporate governance.

Mr. Tarullo, a law professor at Georgetown University who was also an economic advisor to President Clinton, will fill an open seat on the Federal Reserve board in Washington. He is currently leading Mr. Obama’s transition team at the Treasury Department, and is considered an expert in international economic regulation.

In announcing the appointments, Mr. Obama was harshly critical of the “disdain for regulation” shown by regulatory agencies in recent years and said the country needed “regulatory agencies ready and willing to enforce the law.”

He pledged to remake the financial regulatory system to adapt to the challenges of a new century. “We will be releasing a very detailed plan on how that regulatory upgrade will take place,” he said.

Mr. Obama also called for a shift in ethics on Wall Street. “We can have the best regulators in the world, but everyone is going to have to ask themselves, not only is this profitable, not only will it lead to a big bonus, but is it right?” he said. “Does it conform to higher standards in terms of how we operate?”

In addition to serving at the S.E.C., Ms. Schapiro was chairwoman of the Commodities Futures Trading Commission during the Clinton administration, an independent agency created by Congress to regulate trading in commodity futures and the option markets. Her service at both agencies could suggest that Mr. Obama is considering combining the two regulators, a structure long supported by many experts to streamline market oversight.

Ms. Shapiro, who would be the first woman to head the S.E.C. for a full term, said that the current crisis on Wall Street “requires an aggressive, systemic response” to restore trust and protect investors. She pledged forceful enforcement of current law and said “thoughtful reform of our regulatory structures” would be her top priority.

The selection of Mr. Tarullo to fill one of two vacant seats on the Fed’s board, which is also subject to approval by the Senate, will allow Mr. Obama to begin making his mark on the nation’s bank. All of the current board members, including the chairman Ben S. Bernanke, were hand-picked by President Bush.

On Friday, Mr. Obama is expected to announce that Representative Ray LaHood, a Republican from Illinois, will be his transportation secretary.

Mr. LaHood, who is retiring after seven terms in the House, has overseen major spending projects as a member of the House Appropriations Committee. Known for his bipartisan alliances and his moderate views, he will be the second Republican named to the cabinet, after Robert M. Gates, the current defense secretary who has agreed to stay on.

Mr. Obama is also expected to nominate Representative Hilda Solis, Democrat of California, as his labor secretary and Ron Kirk, a former mayor of Dallas, as his trade representative, transition aides said Thursday.

Helene Cooper contributed reporting from Washington.

This article has been revised to reflect the following correction:

Correction: December 30, 2008
An article on Dec. 18 about President-elect Barack Obama’s choice of Mary L. Schapiro to be the next chairwoman of the Securities and Exchange Commission misstated the name of Ms. Schapiro’s current employer. She heads the Financial Industry Regulatory Authority, not the Financial Services Regulatory Authority. The error was repeated in an article and editorial on Dec. 19 and in an article on Dec. 25.

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