March 31, 2017
While attention on Capitol Hill last week was focused on health care and Supreme Court Nominee Neil Gorsuch, the Senate Banking Committee quietly held a hearing on the nomination of Jay Clayton for SEC Chair, setting up a committee vote on the nomination for April 4. During the hearing, Mr. Clayton avoided specifically identifying any Dodd-Frank Act provisions which need revision despite repeated questions, stating simply, "Dodd-Frank should be looked at, in particular rules that have been in place as to whether they are achieving their objectives effectively." Notably, Mr. Clayton declined to state his opinion on pay ratio, even when specifically asked. The bulk of Mr. Clayton's remarks at the hearing focused on revitalizing the U.S. capital markets, which are suffering from what he characterized as fading attractiveness to foreign companies—largely in part due to regulation. Mr. Clayton emphasized the need to revisit the myriad of complex rules while still maintaining investor protections, citing the decline in U.S. public offerings. Mr. Clayton's experience aligns with several past SEC chairs, and he is expected to be confirmed by the Committee. However, several Senators as well as a coalition of progressive groups have seized on the nomination, with Senators Bernie Sanders and Elizabeth Warren holding a campaign-style rally criticizing Mr. Clayton for his Wall Street ties. With the SEC currently deadlocked with just two sitting commissioners—Republican Acting Chair Piwowar and Democrat Kara Stein—on the five-member commission, the confirmation of Mr. Clayton is an important first step in filling the vacant seats, as the Chairman sets the regulatory and enforcement priorities for the agency.