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Regulating the Regulators: The Executive Branch and the SEC, 1981-2008

An Independent Agency

Working Together

“There was obviously a lot on the mind of the President. I’m sure the SEC was not on the top of the agenda item at each morning briefing, but I certainly was never given the impression that the Commission was viewed as a backwater, unimportant, irrelevant or anything else.”

- May 15, 2015 Interview with Steven Wallman

John Fedders, who was at the SEC during the 1980s, and Peter Derby, who served there two decades later, had the same philosophy for the SEC’s working relationship with the White House: no surprises. Fedders recalled, “That would be the worst thing you could do – to create a surprise.” Derby elaborated: “The official communication would be from an advisor in the West Wing, usually on the Economic Council … We are an independent agency, but we kept the White House abreast of policies that were being developed or introduced, and we would get views in return from them, as well as new concerns. Everything was always a flow of information. Our rule was, no surprises.”¹⁴

Contact between the White House and the SEC was limited. Michael Halloran remembered, “We had very little contact with the White House. They did not call up and give us orders or anything.” Elisse Walter noted, “As a Commissioner, you have nothing to do with the White House, absolutely nothing. You have very little to do with the White House when you’re Chairman. People seem to think that you get called by the President every day. You don’t get called by anybody anytime.”¹⁵

SEC Chairmen and Commissioners could face challenges in building relationships with the agency staff. Arthur Levitt was advised to “define yourself with your staff. If they support you, it will be extraordinarily helpful, and if they don’t, you’re doomed.” Joseph Grundfest observed, “The staff’s view was Commissioners come and go, but we’re here forever. They knew that in four or five years I would be gone. So the staff can develop a strategy that says, ‘Okay, we have to follow a containment-in-management approach with regard to any Commissioner or even Chairman, because at some point they’re gone. We’re career.’”¹⁶

SEC Chairmen also were challenged in working with their fellow Commissioners, due, ironically, to the Sunshine Act of 1976. As Daniel Goelzer noted, “A big effect of the Sunshine Act was to make the Chairman more powerful, to give him a much bigger role in setting the agenda. The Chairman could meet with staff freely, but he couldn’t meet with his fellow Commissioners except in a formalized, announced-to-the-public kind of setting. That made the Chairman more dominant and eroded collegiality.” For Cynthia Glassman, the Sunshine Act “makes it very difficult to be collegial and to develop a consensus on areas where there are strong differences of views.”¹⁷

The effect of the Sunshine Act, along with the need to keep the White House closely informed, meant that the SEC staff found themselves working more directly with the Chairmen rather than the Commissioners. Paul Roye recalled, “As a division director, you really work for the Chairman. It’s your job to carry out the Chairman’s wishes and his approach to dealing with the issues. You’re pretty much an advocate for the Chairman with the other Commissioners.” Robert Plaze noted, “Every Chairman I have worked for at the Commission – there were seven of them – always pushed us to get stuff out of the door before they left. Every administration, before it leaves, wants to finish the work that it started. It’s not politics in a sense that one point of view wants to take advantage of another point of view. Everybody wants to get their business done.”¹⁸

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Footnotes:

(14) August 9, 2006 Interview with John Fedders; June 12, 2015 Interview with Peter Derby

(15) May 5, 2011 Interview with Michael Halloran; May 9, 2014 Interview with Elisse Walter.

(16) June 20, 2013 Interview with Arthur Levitt; June 20, 2013 Interview with Joseph Grundfest

(17) April 15, 2008 Interview with Daniel Goelzer; November 21, 2005 Interview with Cynthia Glassman

(18) June 21, 2016 Interview with Paul Roye; June 7, 2016 Interview with Robert Plaze

Related Museum Resources

Papers

July 17, 1981: Letter to James Baker from SEC Chairman John Shad with "The SEC and Capital Formation" draft
transcript pdf (Courtesy of the Ronald Reagan Library)
July 23, 1981: Letter to C. Boyden Gray from Edward H. Auchincloss on proposed amendment of Section 13(f) of Securities Exchange Act of 1934
image pdf (Courtesy of George Bush Presidential Library and Museum)
August 20, 1981: Letter to C. Boyden Gray from Richard Grant, SEC Division of Investment Management on Edward Auchincloss letter
image pdf (Courtesy of George Bush Presidential Library and Museum)
March 29, 1982: Letter to C. Boyden Gray from SEC Commissioner John Evans with invitation to Vice President Bush to be keynote speaker at VII Interamerican Conference of Securities Commissioners
image pdf (Courtesy of George Bush Presidential Library and Museum)
July 9, 1982: Note to SEC Chairman John Shad from Edwin Meese for statement on Public Utility Holding Company Act
transcript pdf (Courtesy of the Ronald Reagan Library)
August 13, 1982: Letter from SEC Commissioner John R. Evans to William P. Clark, Assistant to the President for National Security Affairs, re travel to Quito, Ecuador to plan the VIII Interamerican Conference of Securities Commissions
transcript pdf (Courtesy of the estate of John R. Evans; made possible through a gift from Quinton F. Seamons)
September 24, 1982: Note to James Baker from SEC Chairman John Shad with keynote remarks at SEC Government-Business Forum
image pdf (Courtesy of the Ronald Reagan Library)
October 7, 1982: Letter to James Frey, Office of Management and Budget from SEC Chairman John Shad in support of SEC/CFTC accord
transcript pdf (Courtesy of the Ronald Reagan Library)
October 9, 1982: Memo for the President on H.R. 6156 - Jurisdiction of the SEC
transcript pdf (Courtesy of the Ronald Reagan Library)
October 12, 1982: Memo to Fred Fielding from Peter Rusthoven on H.R. 6156 - Jurisdiction of the SEC
transcript pdf (Courtesy of the Ronald Reagan Library)
October 13, 1982: Letter to Edwin Meese from SEC Chairman John Shad with talking points on SEC
transcript pdf (Courtesy of the Ronald Reagan Library)
October 13, 1982: Memo to Roger Porter from Les Denend approving H.R. 6156 - Jurisdiction of the SEC
transcript pdf (Courtesy of the Ronald Reagan Library)
October 19, 1982: Memo to Christopher Hicks from John Fedders on SEC enforcement actions, 1980-1982
image pdf (Courtesy of the Ronald Reagan Library)
January 25, 1983: Memo to Fred Fielding from Shannon Fairbanks on issue coordination between SEC and White House Office of Policy Development
transcript pdf (Courtesy of the Ronald Reagan Library)
February 23, 1983: Memo to Roger Porter and Shannon Fairbanks from Fred Fielding on issue coordination between SEC and White House Office of Policy Development
transcript pdf (Courtesy of the Ronald Reagan Library)
May 4, 1983: Letter to C. Boyden Gray from SEC Chairman John Shad with SEC 1982 Annual Report
image pdf (Courtesy of George Bush Presidential Library and Museum)
May 17, 1983: Acknowledgement to SEC Chairman John Shad from Richard Breeden on receipt of SEC Annual Report
image pdf (Courtesy of George Bush Presidential Library and Museum)
June 17, 1983: Acknowledgement to SEC Commissioner Bevis Longstreth from Richard Breeden
image pdf (Courtesy of George Bush Presidential Library and Museum)
July 15, 1983: Letter to Vice President George Bush from SEC Chairman John Shad with report of SEC Advisory Committee on Tender Offers
image pdf (Courtesy of George Bush Presidential Library and Museum)
October 26, 1983: Letter to SEC Chairman John Shad from Richard Hudson, The Wall Street Journal with questions for profile
image pdf (Courtesy of the Ronald Reagan Library)
November 30, 1983: Letter to Richard Hudson, The Wall Street Journal from Andrew Rothman, SEC with SEC Chairman Shad responses
image pdf (Courtesy of the Ronald Reagan Library)
December 20, 1983: Letter to Fred Fielding from SEC Chairman John Shad concerning The Wall Street Journal
image pdf (Courtesy of the Ronald Reagan Library)
January 3, 1984: Memo from John Huber, SEC Division of Corporation Finance to professional staff on operating procedures
image pdf (Courtesy of John Huber)
March 23, 1984: Memo to William Niskanen from Stephen Halpert, Council of Economic Advisors on SEC tender offer reform proposals
image pdf (Courtesy of George Bush Presidential Library and Museum)
March 30, 1984: Letter to Jennifer Fitzgerald from SEC Chairman John Shad on invitation to Vice President Bush to address 1984 Major Issues Conference
image pdf (Courtesy of George Bush Presidential Library and Museum)
May 2, 1984: Acknowledgement to Vice President Bush from SEC Chairman John Shad on confirmation to address Major Issues Conference
image pdf (Courtesy of George Bush Presidential Library and Museum)
June 14, 1984: Note to James Baker from SEC Chairman John Shad with "The Leveraging of America"
image pdf (Courtesy of the Ronald Reagan Library)
June 28, 1984: Excerpts from Remarks by Vice President George Bush at SEC 1984 Major Issues Conference
image pdf (Courtesy of George Bush Presidential Library and Museum)
June 28, 1984: Vice President Office Press Release: Excerpts from Remarks by Vice President George Bush at SEC 1984 Major Issues Conference
image pdf (Courtesy of George Bush Presidential Library and Museum)
July 19, 1984: Letter to John Svahn from SEC Chairman John Shad on meeting on tender offer legislation
image pdf (Courtesy of the Ronald Reagan Library)
August 14, 1984: Letter to SEC Chairman John Shad from Thomas Healey, Department of the Treasury on federal income tax treatment of golden parachute payments
image pdf (Courtesy of David B.H. Martin)
September 27, 1984: Note to Edwin Meese from SEC Chairman John Shad with draft talk to Harvard Business School Club
image pdf (Courtesy of the Ronald Reagan Library)
October 26, 1984: Review of upcoming speech to Harvard Business School Club to SEC Chairman John Shad from Secretary of the Treasury Donald Regan
image pdf (Courtesy of David B.H. Martin)
February 8, 1985: Memo from William Wood and Ernestine Zipoy on revised operating goals for SEC Division of Corporation Finance for fiscal 1985
transcript pdf (Courtesy of John Huber)
January 2, 1986: New Year's Resolutions - John Huber, SEC Division of Corporation Finance
transcript pdf (Courtesy of John Huber)
October 16, 1987: Memo to SEC Chairman Ruder from Linda Fienberg on Richard Breeden request
image pdf (Courtesy of David S. Ruder)
November 19, 1987: Letter to Vice President George Bush from SEC Chairman David Ruder with proposal to amend Trust Indenture Act of 1939
image pdf (Courtesy of David S. Ruder)
March 18, 1988: White House Press Release: Working Group on Financial Markets, with list of members
image pdf (Courtesy of David S. Ruder)
May 16, 1988: Statement to the President by SEC Chairman Ruder on interim report of the working group on financial markets
image pdf (Courtesy of David S. Ruder)
June 23, 1988: Letter to Vice President George Bush from SEC Chairman David Ruder with legislative provisions in response to October 1987 market break
image pdf (Courtesy of David S. Ruder)
March 9, 1990: Letter to Andrew Card from Wendy Gramm, Commodity Futures Trading Commission supporting President Bush meeting with independent regulatory agencies
image pdf (Courtesy of George Bush Presidential Library and Museum)
March 15, 1990: Handwritten reply to Wendy Gramm from Andrew Card on President Bush meeting with agencies
image pdf (Courtesy of George Bush Presidential Library and Museum)
May 4, 1990: Letter to William Diefenderfer, Office of Management and Budget from SEC Chairman Richard Breeden on possible transfer of regulation of stock index futures to SEC
image pdf (Courtesy of George Bush Presidential Library and Museum)
June 21, 1990: Memo to President Bush from Lud Ashley on collapse of thrift industry
image pdf (Courtesy of George Bush Presidential Library and Museum)
September 18, 1990: Letter to Michael Boskin, Council of Economic Advisers from SEC Chairman Richard Breeden on September 10th Senate testimony
image pdf (Courtesy of George Bush Presidential Library and Museum)
October 5, 1990: Presidential Event Proposal - Signing ceremony for Securities Law Enforcement Remedies Act and Market Reform Act
image pdf (Courtesy of George Bush Presidential Library and Museum)
October 12, 1990: Memorandum for the President - Market Reform Act and signing statement
image pdf (Courtesy of George Bush Presidential Library and Museum)
October 16, 1990: Statement by President Bush on signing Market Reform Act of 1990
image pdf (Courtesy of George Bush Presidential Library and Museum)
October 22, 1990: Memo to President Bush from Jim Cicconi requesting signature on commemorative copy of Market Reform Act of 1990 for Richard Breeden
image pdf (Courtesy of George Bush Presidential Library and Museum)
October 31, 1990: Memo to Michael Boskin from Charles Jacklin on developments related to financial markets and institutions
image pdf (Courtesy of George Bush Presidential Library and Museum)
November 21, 1990: Letter to President Bush from John Medlin on economy
image pdf (Courtesy of George Bush Presidential Library and Museum)
November 25, 1990: Request to Nicholas Brady and Roger Porter from President Bush for comments on November 15th memo from Lud Ashley
image pdf (Courtesy of George Bush Presidential Library and Museum)
November 28, 1990: Memo to President Bush from Roger Porter on Lud Ashley memo
image pdf (Courtesy of George Bush Presidential Library and Museum)
December 17, 1990: Letter to Roger Porter from Gregory Wilson, McKinsey & Company on reform of banking system
image pdf (Courtesy of George Bush Presidential Library and Museum)
January 11, 1991: Reply to Gregory Wilson from Roger Porter
image pdf (Courtesy of George Bush Presidential Library and Museum)
February 5, 1991: Treasury News - Modernizing the Financial System: Recommendations for Safer, More Competitive Banks
image pdf (Courtesy of George Bush Presidential Library and Museum)
February 5, 1991: Treasury News - Secretary Nicholas F. Brady remarks to the press on financial services reform
image pdf (Courtesy of George Bush Presidential Library and Museum)
February 7, 1991: Administration statements regarding the exclusivity clause
image pdf (Courtesy of George Bush Presidential Library and Museum)
March 12, 1991: Letter to Richard Darman, Office of Management and Budget from SEC Chairman Richard Breeden on exclusivity clause
image pdf (Courtesy of George Bush Presidential Library and Museum)
March 14, 1991: Letter to Richard Darman, Office of Management and Budget from James Jones, American Stock Exchange
image pdf (Courtesy of George Bush Presidential Library and Museum)
April 2, 1991: Letter to Michael Boskin, Council of Economic Advisers from SEC Chairman Richard Breeden on Federal Reserve Chairman Alan Greenspan's view of exclusivity clause
image pdf (Courtesy of George Bush Presidential Library and Museum)
April 12, 1991: CFTC/SEC Dispute - Recent Action on the Hill
image pdf (Courtesy of George Bush Presidential Library and Museum)
April 18, 1991: Letter to President Bush from U.S. Representative Charles Schumer and Doug Barnard supporting banking reform legislation
image pdf (Courtesy of George Bush Presidential Library and Museum)
May 16, 1991: Memo to C. Boyden Gray from Gene Schaerr on independent agency initiative
image pdf (Courtesy of George Bush Presidential Library and Museum)
May 16, 1991: Memo to Vice President Dan Quayle from C. Boyden Gray on independent agency initiative
image pdf (Courtesy of George Bush Presidential Library and Museum)
May 17, 1991: Memo to President Bush from C. Boyden Gray on White House control over independent agencies
image pdf (Courtesy of George Bush Presidential Library and Museum)
May 17, 1991: Memo to President Bush from Vice President Quayle on proposals to increase effectiveness and efficiency of regulation by independent agencies
image pdf (Courtesy of George Bush Presidential Library and Museum)
June 18, 1991: Memo to Clayton Yeutter, Republican National Committee from Kenneth Guenther, Independent Bankers Association of America on financial reform
image pdf (Courtesy of George Bush Presidential Library and Museum)
June 24, 1991: Note to John Sununu from Clayton Yeutter with Kenneth Guenther memo
image pdf (Courtesy of George Bush Presidential Library and Museum)
September 25, 1991: Protest to President George Bush from Bruce Atwater, General Mills, Inc. on SEC public disclosure proposals
transcript pdf (Courtesy of George Bush Presidential Library and Museum)
December 6, 1991: Letter to President Bush from U.S. Representative John Rhodes with letter from Kathy McNay on economic recession
image pdf (Courtesy of George Bush Presidential Library and Museum)
January 7, 1992: Memo for Tim Flanigan from C. Boyden Gray on independent agencies
image pdf (Courtesy of George Bush Presidential Library and Museum)
March 20, 1992: Letter to Vice President Quayle from SEC Chairman Richard Breeden with proposed Small Business Incentive Act of 1992
image pdf (Courtesy of George Bush Presidential Library and Museum)
May 5, 1992: Memorandum from J. French Hill for meeting with Richard Breeden
image pdf (Courtesy of George Bush Presidential Library and Museum)
May 18, 1992: Memo to C. Boyden Gray from Clayton Yeutter on SEC proposal on stock options
image pdf (Courtesy of George Bush Presidential Library and Museum)
June 22, 1992: Letter to Secretary of the Treasury Nicholas Brady from Melvin Waxman concerning SEC Chairman Richard Breeden
image pdf (Courtesy of George Bush Presidential Library and Museum)
October 2, 1992: Letter to President Bush from Greg Peterson, Coopers & Lybrand on securities reform legislation
image pdf (Courtesy of George Bush Presidential Library and Museum)
February 4, 1994: Letter to President Clinton from North Carolina State Treasurer Harlan Boyles
transcript pdf (With permission of Arthur Levitt Papers, Columbia University in the City of New York)
June 20, 1995: Letter to Secretary of the Treasury Robert Rubin from SEC Chairman Arthur Levitt on Orange County
image pdf (With permission of Arthur Levitt Papers, Columbia University in the City of New York)
January 5, 1996: Letter from President Clinton to SEC Chairman Arthur Levitt requesting report on impact of securities litigation reform act
image pdf (Courtesy of the William J. Clinton Presidential Library & Museum)
March 12, 1996: Remarks by SEC Chairman Arthur Levitt in joint meeting with Secretary of the Treasury Robert Rubin on management of public funds
image pdf (With permission of Arthur Levitt Papers, Columbia University in the City of New York)
April 15, 1997: Letter to President Clinton from SEC Chairman Arthur Levitt with report on first year of practice under Private Securities Litigation Reform Act of 1995
image pdf (Courtesy of the William J. Clinton Presidential Library & Museum)
August 25, 1997: Letter to SEC Chairman Arthur Levitt from Attorney General Janet Reno on ABA pay to play resolution
image pdf (With permission of Arthur Levitt Papers, Columbia University in the City of New York)
September 22, 1997: Reply to Attorney General Janet Reno from SEC Chairman Arthur Levitt
image pdf (With permission of Arthur Levitt Papers, Columbia University in the City of New York)
May 7, 1998: Treasury News: Joint Statement by Treasury Secretary Robert Rubin, Federal Reserve Board Chairman Alan Greenspan and Securities and Exchange Commission Chairman Arthur Levitt on over-the-counter derivatives
image pdf (Courtesy of the William J. Clinton Presidential Library)
December 31, 2001: Report on management controls to President Bush from SEC Chairman Harvey Pitt
image pdf (Courtesy of George W. Bush Presidential Library and Museum)
March 19, 2002: Email to White House from Consuelo Hitchcock on SEC Chairman Harvey Pitt upcoming Senate testimony
image pdf (Courtesy of George W. Bush Presidential Library and Museum)
July 3, 2002: Email to Karl Rove from Brian Bennett with letter from Robert Dunn, Business for Social Responsibility
image pdf (Courtesy of George W. Bush Presidential Library and Museum)
July 21, 2002: Letter to Andrew Card from Kevin Costello, South Shore Chamber of Commerce in opposition to Federal Home Loan Banks registering with the SEC
image pdf (Courtesy of George W. Bush Presidential Library and Museum)
August 28, 2002: Response to Kevin Costello, South Shore Chamber of Commerce from Keith Hennessey
image pdf (Courtesy of George W. Bush Presidential Library and Museum)
December 19, 2003: Report on management controls to President Bush from SEC Chairman William Donaldson
image pdf (Courtesy of George W. Bush Presidential Library and Museum)
December 22, 2004: Report on management controls to President Bush from SEC Chairman William Donaldson
image pdf (Courtesy of George W. Bush Presidential Library and Museum)
June 15, 2005: Report and recommendations to President Bush from SEC Chairman William Donaldson pursuant to Section 401(c) of Sarbanes-Oxley Act
image pdf (Courtesy of George W. Bush Presidential Library and Museum)

Oral Histories

12 June 2015 Peter Derby With Dr. William Thomas

edited transcript (pdf)

09 August 2006 John Fedders With Dr. Kenneth Durr

edited transcript (pdf)

21 November 2005 Cynthia Glassman With Dr. Kenneth Durr

edited transcript (pdf)

14 April 2008 Daniel Goelzer With Dr. Kenneth Durr

Video: 10:10

edited transcript (pdf)

Daniel Goelzer served on the staff of the SEC from the mid-70’s through 1990. He began his SEC career in 1974 as a staff attorney in the Office of the General Counsel, and rose through the ranks to become the Commission’s General Counsel from 1983 to 1990. He also worked in the Office of the Chairman and was Executive Assistant to both Chairman Harold Williams and Chairman John Shad. After leaving the SEC, he was partner at the law firm of Baker & McKenzie LLP in Washington, DC until his appointment as a founding Board member of the Public Company Accounting Oversight Board (PCAOB) in 2002. He served as PCAOB’s Acting Chairman from 2009 – 2011 and returned to Baker & McKenzie after his PCAOB term ended in 2012. He was one of the founding Trustees of the SEC Historical Society.

20 June 2013 Joseph Grundfest With Robert K.D. Colby