Trump’s SEC pick likely to get rough ride in Congress

Long-standing ties to Goldman and Wall Street

WASHINGTON • Goldman Sachs may be about to get another friend in Washington.

Jay Clayton, a well-connected Wall Street lawyer who is President Donald Trump’s pick to lead the U.S. Securities and Exchange Commission, is sure to face sharp questions from Democrats at his confirmation hearing Thursday over his years of work for Goldman and other financial giants.

Trump has already drawn upon Goldman alumni for key financial posts in his administrations — notably for Treasury secretary, Steven Mnuchin, and the head of the National Economic Council, Gary Cohn.

As SEC chairman, Clayton would be in charge of, among other things, protecting investors from wrongdoing on Wall Street. He would oversee the enforcement of rules written by the SEC under the law that reshaped the regulation of banks and Wall Street after the 2008 financial crisis and the Great Recession. And he would take part in deciding on enforcement actions that SEC attorneys bring against corporations and financial firms.

For critics, the big question will be: How vigorous a regulator would Clayton prove to be?

A partner in the whiteshoe firm Sullivan & Cromwell, Clayton would take over the leadership of the SEC with a Republican majority among its eventual five members. (Three seats are vacant.)

In line with Trump’s pledge to ease many rules that flowed from the DoddFrank financial regulatory law, a Clayton-led SEC would be expected to take a comparatively loose approach to regulation.

Though Clayton’s confirmation is virtually assured by the Republican-controlled Senate, Democrats on the Senate Banking Committee say they will come prepared Thursday with a volley of skeptical questions.

“It’s hard to see how an attorney who’s spent his career helping Wall Street beat the rap will keep (Trump’s) promise to stop big banks and hedge funds from ‘getting away with murder,” Sen. Sherrod Brown of Ohio, the committee’s senior Democrat, said after Clayton’s nomination was announced.

Among the targets for critics is Clayton’s blue-chip client list, brimming with Wall Street powerhouses and hedge funds as well as some corporations that have faced accusations of misconduct.

Among them are Valeant Pharmaceuticals, a Canadian drug maker that is the target of at least 10 government investigations, including a congressional probe into drug prices, and Volkswagen, embroiled in a scandal over alleged emissions cheating.