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Waiting for Godot, Superman and Mary Jo White…

Why is the SEC taking so long to set a rule on corporate political donations?

In the documentary “Waiting for Superman” which is about reforming public schools,  Geoffrey Canada, the famous Harlem advocate for better education, explains how disappointed he was as a child to discover that Superman wasn’t real and couldn’t rescue him from poverty, racism or a broken education system. This meant, of course, that real people like him would have to do the hard work of fixing these knotty problems.

A year or so back I compared waiting for Mary Jo White to “Waiting for Godot.” I did not actually mean it literally as Godot never shows up in the play. I hope waiting for Mary Jo White is more successful than that. 

For the past few years, corporate reformers have been waiting for Mary Jo White to fight the dark money problem that has metastasized in federal elections.  Between the day in 2010 when Citizens United was decided and today, over $600 million in dark untraceable money has been spent. That worries shareholders because they could be footing the bill if the dark money is from corporate coffers. 

For those not in the know, Mary Jo White is the Chair of the Securities and Exchange Commission, which is in charge of regulating publicly traded corporations. They have had this job since the Great Depression. The SEC was created in response to the 1929 stock crash. One of the contributing factors to that crash was the sale of worthless stocks with weak or nonexistent disclosures. 

Before he was a Justice on the Supreme Court, Louis Brandeis argued for better disclosure on stocks to give the buyer fair notice of what they were buying. As Brandeis wrote: “To be effective, knowledge of the facts must be actually brought home . . . and this can best be done by requiring the facts to be stated in good, large type in every notice, circular, letter and advertisement.” He argued that labeling on stocks should be like labeling on food, a theme Justin Levitt has advocated with labeling of political ads today.

Now at first blush, it might seem that the Chair of the SEC has no jurisdiction over corporate political spending but this is a common misconception. The SEC already regulates money in politics through various preexisting rules and laws. For example, the SEC and the Department of Justice have joint jurisdiction over the Foreign Corrupt Practices Act (FCPA). This law prevents U.S. firms from using bribes to get or keep business abroad. This law covers campaign contributions to foreign elected officials when they are given with the intent to procure business. The SEC will and does levy heavy fines for violating this aspect of the FCPA. 

The SEC also regulates pay to play in both the municipal bond and public pension fund markets. In other words, the SEC has ample experience regulating in the area of money in politics.  Some might argue that they actually have more impact than the Federal Election Commission since the SEC has the advantage of not being deadlocked in 3–3 ties. 

Louis Brandeis was worried about lax rules for those able to use other people’s money whether through the banking industry or corporations. His basic assertion was that one is more careful with one’s own money and is more careless and risk prone when using the dime belonging to the other fellow. This problem has not gone away. Corporate managers are able to use other people’s money on politics without telling investors where they are spending the money or why. This is why an across-the-board disclosure rule is needed from the SEC.

Unlike Superman or Godot, Mary Jo White has real power to fix the dark money problem on behalf of the shareholders of publicly traded companies. She was grilled at a Congressional hearing asking her why she hasn’t acted despite over one million public comments requesting a new transparency rule. She demurred. But the question can fairly be put, “Where is Mary Jo White?” We need her to act on Petition 4–637 before the Obama administration packs up and leaves without tackling this solvable problem.  

The views expressed are the author’s own and not necessarily those of the Brennan Center for Justice.

(Photo: Thinkstock)