Mary Jo White, President Obama’s nominee to lead the Securities and Exchange Commission, is trying to quell concerns about potential conflicts of interest as she approaches her Senate confirmation hearing. Facing questions about her lack of regulatory experience and her work defending Wall Street clients, Ms. White recently scheduled meetings with members of the Senate Banking Committee and answered a 20-page boilerplate questionnaire, DealBook’s Ben Protess reports.
“As a government official, I believe I have an established track record and the reputation of being tough, but fair,†Ms. White, who had a reputation as a tenacious prosecutor before going into private practice, said in the document. Her responses shed “new light on her list of Wall Street clients, including little-known work performed for HSBC’s former chief executive,†Mr. Protess writes. The document also “describes her ties to New York Democratic causes and laurels she earned both as a defense lawyer and federal prosecutor.â€
Ms. White also vowed “as far as can be foreseen†never to return to her law firm, Debevoise & Plimpton. She had already agreed to recuse herself for one year from most matters involving former clients.
While Ms. White’s nomination is expected to receive Senate approval, some Democrats harbor reservations. They note that Ms. White’s husband, John W. White, is co-chairman of the corporate governance practice at Cravath, Swaine & Moore, representing clients that the S.E.C. regulates. They also fear Ms. White’s recusals may harm her ability to run the agency, Mr. Protess writes. In a meeting on Tuesday, Senator Sherrod Brown, Democrat of Ohio, pushed Ms. White to explain “whether her previous employment or her spouse’s current employment could cause her to recuse herself from key business fac! ing the S.E.C.,†his spokesman said in a statement.
RISKS WITH A WALL STREET TAX  | The proposal to levy a small tax on financial transactions appears, on the surface, to be a win for everyone involved. But recent history would suggest otherwise, Steven M. Davidoff writes in the Deal Professor column. New York State has had such a tax for decades, although it has changed over the years and is now simply returned to traders immediately after being collected. Mr. Davidoff writes that a study of New York State’s tax over the decades by Anna Pomeranets and Daniel G. Weaver “found that it increased the cost of capital for investors and reduced trading volume. Most important, they found the tax actually increased trading volatility by as much as 10 percent. Increasing volatility is exatly what advocates of the tax don’t want.â€
In addition, Mr. Davidoff says, a tax on financial transactions raises the issue that traders may move elsewhere. “In 1984, Sweden adopted a financial transaction tax. Some 30 percent to 50 percent of the country’s trading volume then shifted to Britain.â€
DIMON VOWS TO ADDRESS PRACTICES ON PAYDAY LOANS Â |Â
JPMorgan Chase is among the big banks that allow Internet-based payday lenders to withdraw payments automatically from borrowers’ accounts, even when customers want the withdrawals to stop, as The New York Times reported over the weekend. On Tuesday, Jamie Dimon, JPMorgan’s chief executive, addressed those concerns, calling the practice “terrible.†He said at the bank’s investor day that JPMorgan was examining the issue and would make changes, Jessica-Silver-Greenberg reports in The New York Times.
Mr. Dimon gave a shout-out to Ms. Silver-Greenberg, thanking her for bringing the issue to his attention, according to Heidi N. Moore, an editor at The Guardian. In the original article, Ms. Silver-Greenberg reported that the Federal Deposit Insurance Corporation and the Consumer Financial Protection Bureau were examining banks’ roles in the online loans.
ON THE AGENDA  | Anheuser-Busch InBev and the Fortress Investment Group report earnings before the market opens. Groupon and J.C. Penney announce results on Wednesday evening. Ben S. Bernanke gives a report on monetry policy to the House Financial Services Committee at 10 a.m. The Senate Agriculture Committee conducts a hearing about oversight of the Commodity Futures Trading Commission at 2:30 p.m. Mario Draghi, president of the European Central Bank, speaks in Munich at 12:30 p.m. On CNBC at 9 a.m. is James Woolery, co-head of JPMorgan’s North American mergers and acquisitions business, who is headed to Cadwalader, Wickersham & Taft.
BAIR ON INCOME INEQUALITY Â |Â Sheila C. Bair, the former head of the Federal Deposit Insurance Corporation, has an Op-Ed essay in The New York Times in which she laments growing income inequality in the United States. She lays the blame, in part, on the government.
“I am a capitalist and a lifelong Republican,†Ms. Bair says. “! I believe! that, in a meritocracy, some level of income inequality is both inevitable and desirable, as encouragement to those who contribute most to our economic prosperity. But I fear that government actions, not merit, have fueled these extremes in income distribution through taxpayer bailouts, central-bank-engineered financial asset bubbles and unjustified tax breaks that favor the rich.†As a possible remedy, she writes, “Republicans should put fundamental tax reform on the table and make it our priority to end preferential treatment of investment income, which lets managers of hedge funds pay half the tax rate of managers of shoe stores.â€
Clearwire Said to Be Tapping Financing From Sprint  | Clearwireis planning to tap financing from Sprint Nextel, in the form of notes that convert to stock, The Wall Street Journal reports, citing unidentified people familiar with the situation. The move would complicate the rival bid for Clearwire by Dish Network, the newspaper says. WALL STREET JOURNAL
Best Buy Takeover Attempt May Be in Doubt  | The effort by Richard M. Schulze, the founder of Best Buy, the take the company private “is in trouble after attempts to secure financing faltered while an alternative strategy to line up minority investors may not pan out either, five sources familiar with the matter said,†Reuters reports. REUTERS
Tribune Hires Investment Banks to Weigh a Sale of Its Top Newspapers  | The Tribune Company has hired investment banks to pursue a sale of its top newspapers, including The Chicago Tribune and The Los Angeles Times. DealBook »
Rosneft Expected to Win European Approval for TNK-BP Deal  |Â
REUTERS
US Airways and American Airlines Executives Questioned by Lawmakers  |Â
REUTERS
SFX Entertainment Agrees to Buy Dance Music Site  | “SFX Entertainment, the company led by the media executive Robert F.X. Sillerman, has agreed to buy the music download site Beatport, part of the company’s plan to build a $1 billion empire centered on the electronic dance music craze,†the Media Decoder blog reports. MEDIA DECODER
Wall Street Pay Rises, for Those Who Still Have a Job  | The average cash bonus for people employed in New York City in the financial! industry! rose by roughly 9 percent, to $121,900, in 2012, the New York State comptroller said. DEALBOOK
A Robust Year for Bank Earnings  | United States banks reported $141.3 billion in net income last year, the second-best on record, according to the Federal Deposit Insurance Corporation. BLOOMBERG NEWS
Goldman Sachs’s Head of Electronic Trading to Step Down  | Greg Tusar, the global head of electronic trading at Goldman Sachs, is leaving the firm at the end of May after 13 years, Bloomberg News reports.
Nides Rejoins Morgan Stanley From State Dept.  | Morgan Stanley has announced that Thomas R. Nides, who served as its chief operating officer until early 2011, will return as a vice chairman. DealBook »
Morgan Stanley Had Trading Losses on 37 Days Last Year  | That was the fewest since 2007, Bloomberg News reports BLOOMBERG NEWS
A! s Banks Sell High-Yield Debt, Risks Loom  |Â
BLOOMBERG NEWS
Russian Banks Sell Bonds in Chinese Currency  | The Wall Street Journal reports: “Russian banks are increasingly selling bonds in the offshore yuan market as growing demand allows them to borrow at cheaper rates and gives them a chance to diversify their funding bases.†WALL STREET JOURNAL
Private Equity Seeks European Bank Assets, but Deals Are Minima  | The Continent’s largest financial institutions are offering enticing opportunities for leading firms, but the banks aren’t playing ball just yet. DealBook »
Private Equity Players See Signs of Excess in Buyout Market  | Speaking at the annual SuperReturn conference in Berlin, several private equity executives discussed concerns about the recent flurry of deal-making activity. DealBook »
Starboard Said to Push for! Sale of ! Office Depot Unit  | The activist investor Starboard Value plans to encourage Office Depot “to sell its Mexico unit to Grupo Gigante SAB, said a person with knowledge of the situation,†Bloomberg News reports. BLOOMBERG NEWS
A Former Icahn Lieutenant and a Real Estate Giant Demand Change at CommonWealth  | Keith Meister, a protégé of Carl C. Icahn, and Jeff T. Blau, chief of The Related Companies, disclosed a 9.8 percent ownership stake in CommonWealth REIT on Tuesday. DealBook »
Why Einhorn’s Win May Be Appleâ™s Gain  | David Einhorn’s victory against Apple in Federal District Court in Manhattan - over a shareholder proposal - may be more of a win for the technology giant, Steven M. Davidoff writes in the Deal Professor column. DealBook »
Esure of Britain Plans an I.P.O. Â |Â The Esure Group, a British insurer, plans to raise $76 million in an I.P.O. in London as Peter Wood, its founder, sells stock, Bloomberg News reports. BLOOMBERG NEWS
PayPal Co-Founder Starts Mobile Payments Company  | Max Levchin, a co-founder of PayPal who runs an incubator called Hard, Valuable, Fun, is introducing a new mobile payments start-up called Affirm, AllThingsD reports. ALLTHINGSD
Pondering Twitter’s Valuation  |Â
WALL STREET JOURNAL
Fed Chairman Defends Stimulus Campaign  | In testimony before the Senate Banking Committee, the Federal Reserve Chairman, Ben S. Bernanke, said the central bank’s economic stimulus program was necessary and effective, and likely to continue for some time, The New York Times reports. NEW YORK TIMES
How Did Bernanke Do on Unemployment  | Ben S. Bernanke emphasized his record of keeping inflation low, but the Fed chairman’s record on unemployment is less impressive, Floyd Norris writes on the Economix blog. NEW YORK TIMES ECONOMIX
Executive Pay Votes May Be Harming Shareholders  | As we enter this year’s proxy season, it is corporate advisers rather than corporate shareholders that are reaping the benefits of the new executive pay rules, Manan Shah of Reuters Breakingviews writes. DealBook »
Regulators Developing Proposals for Overhauling Libor  | A task force of the International Organization of Securities Commissions plans to release proposals for improving benchmark rates by late spring or summer, Bloomberg News reports. BLOOMBERG NEWS
