By Ben Bain
(Bloomberg) -- Donald Trump ridiculed Wall Street on the campaign trail, and frequently criticized his political opponents for their ties to Goldman Sachs Group Inc. Now, Trump is relying on a lawyer who has spent his career representing financial firms, and has his own close ties to Goldman, to lead Wall Street’s top regulator.
Trump will pick Sullivan & Cromwell partner Jay Clayton to run the Securities and Exchange Commission, the president-elect’s transition team said in a statement Wednesday. Clayton’s clients represent a virtual who’s who list of industry titans, including hedge funds, private equity firms and Goldman, where his wife has worked for almost two decades.
Still, Trump’s advisers said Clayton has the experience to provide “strong oversight” of financial firms while helping the incoming president do away with regulations that have stifled job growth.
“Jay Clayton is a highly talented expert on many aspects of financial and regulatory law, and he will ensure our financial institutions can thrive and create jobs while playing by the rules," Trump said in the statement. "We need to undo many regulations which have stifled investment in American businesses, and restore oversight of the financial industry in a way that does not harm American workers.”
Banker Coup
Clayton’s expected nomination continues a surprise coup for financial firms since Trump won the presidency in November. While Trump attacked Wall Street during his run, and many bankers supported Hillary Clinton’s candidacy, the president-elect has tapped a number of industry insiders for key posts. His picks include former Goldman partner Steven Mnuchin to be Treasury Secretary, former Goldman President Gary Cohn for the top White House economic post and billionaire investor Wilbur Ross to lead the Commerce Department.
Clayton, 50, represented Goldman in connection with the $10 billion bailout it received in 2008 as part of the government’s $700 billion rescue of banks during the financial crisis as well as a $5 billion investment by Warren Buffett’s Berkshire Hathaway Inc. in Goldman, according to Sullivan & Cromwell’s website. Other clients have included Och-Ziff Capital Management Group LLC to Oaktree Capital Group LLC. Much of his legal work involved mergers and acquisitions, as well as representing firms facing U.S. investigations.
“We are going to work together with key stakeholders in the financial system to make sure we provide investors and our companies with the confidence to invest together in America,” Clayton said in the statement. “We will carefully monitor our financial sector, as we set policy that encourages American companies to do what they do best: create jobs.”
If confirmed by the Senate, Clayton would replace Mary Jo White, who has said she will step down as SEC chair when President Barack Obama leaves office later this month.
Political Affilation
While Clayton’s Wall Street connections are obvious, his political leanings are less clear. Voter registration records list him as having no party affiliation. His political contributions consist of a $1,000 donation given in 2013 to the campaign committee of Delaware Attorney General Beau Biden, the late son of Democratic Vice President Joe Biden, according to the National Institute on Money in State Politics.
Clayton’s wife, Gretchen, is a wealth manager at Goldman, according to a person with knowledge of the matter. She has worked at the firm since 2000, according to her LinkedIn profile.
For years, the SEC’s agenda has been largely dictated by implementing rules required under the 2010 Dodd-Frank Act, the sweeping legislation Congress passed in response to the financial crisis. Trump’s transition team has promised to dismantle the law. Clayton would likely play a key role in efforts to roll back rules for investment firms and brokers.
To get the SEC back to full strength, Trump will also need to nominate two others to the five-member commission, another Republican and a Democrat. After White steps down later this month, the SEC will be down to two commissioners, Republican Michael Piwowar and Democrat Kara Stein.
--With assistance from Terrence Dopp and Jennifer Epstein. To contact the reporter on this story: Ben Bain in Washintgon at [email protected] To contact the editors responsible for this story: Jesse Westbrook at [email protected] Gregory Mott