By today's election standards, President Barack Obama secured a convincing win over Republican nominee Mitt Romney, garnering 50.6% of the popular vote and 332 electoral votes.
Despite the momentum that those numbers should provide for his second term, Mr. Obama remains wary of the Senate. Evidence of his fear was highlighted by his appointment of Elisse Walter as chairman of the Securities and Exchange Commission on Monday.
Okay, it's not quite that simple. Mr. Obama “designated” Ms. Walter as chairmain to replace the current chair Mary Schapiro, when she leaves on Dec. 14. By doing so, the President cleverly
avoided having to send a nominee up to the Senate for confirmation. Ms. Walter can run the agency through next December, when her term as a SEC commissioner ends.
Ms. Walter's SEC term expired over the summer. But she can serve until the end of the next session of Congress, which likely will be in December 2013.
Perhaps for months, Ms. Walter will preside over a four-member commission due to Ms. Schapiro's vacant seat. This leaves the president with two positions to fill permanently on the five-member SEC.
Mr. Obama could move immediately to nominate a permanent successor to Ms. Schapiro and fill the Democratic seat that she leaves open. That would put the SEC back at full strength rather than forcing it to function with two Republican and two Democratic commissioners, an invitation for gridlock.
Alternatively, Mr. Obama could wait for the term of Republican SEC commission Troy Paredes to end in June and send Republican and Democratic nominees – two commissioners and a chairman – to the Senate. As Duane Thompson, senior policy analyst at Fi360, suggests, this approach gives the Hill GOP something to support in the SEC package.
“It's convoluted,” said Rick Roberts, a principal at Roberts Rehabe & Gradler LLC and a former SEC commissioner.
But as Mr. Roberts notes, if the White House was planning for Ms. Walter to serve as SEC chairman for only a short time, the administration would have given her an “acting” or “interim” appointment rather than “designating” her as chairman.
This means that Mr. Obama may be girding for a Senate confirmation fight. Among those thought to be on the short list for permanent SEC chairman are Mary Miller, undersecretary of Treasury, Sallie Krawcheck, former Bank of America Merrill Lynch chief executive, and Ms. Walter.
Mr. Obama may have decided that with the likely departure of Treasury Secretary Tim Geithner, he wants to limit the number of battles he's waging over financial regulator appointments. The danger of this approach is that the SEC could grind to a halt in the meantime.
Alternatively, Mr. Obama could use the leverage that he gained in the election to structure the SEC as he sees fit. The basic characteristic of Washington depicted in the movie “Lincoln” remains true today – there's nothing more powerful in the capital than a motivated president.
Our current chief executive could point to his
approval rating, which is north of 50%, and the new structure of the Senate, where Democrats gained two seats in the election, to persuade Republicans to allow him to assemble the SEC team of his choice.
While flexing his governing muscles, the president might also try to charm Republicans on the Senate Banking Committee. Bring them down to the White House to discuss how a smoothly running SEC contributes to investor protection. He also could send Ms. Miller or Ms. Krawcheck up to the Hill for sit-downs with Republican senators to reinforce the case.
It may turn out that the SEC nomination process hums along without a hitch. Democratic commissioners Luis Aguilar and Republican commissioner Daniel Gallagher sailed through the Senate last year.
But if comes down to a fight, Mr. Obama only needs to convince five Republicans to back his SEC nominees to achieve the magic 60 votes to overcome a filibuster. He should have the political leverage to get the job done.
