For years, Jay Clayton has helped Wall Street weather run-ins with its regulators. On Thursday, he told lawmakers that he should be the one to regulate them.

“I have zero tolerance for bad actors,” Clayton told the Senate Banking Committee during his nomination hearing to lead the Securities and Exhange Commission. If confirmed, Clayton said, he would make sure “our markets are fair, open, orderly, and efficient and … that investors are protected.”

But the New York lawyer’s deep connections to big banks, particularly Goldman Sachs, and inexperience in prosecuting corporate wrongdoing drew skepticism from Democrats who questioned whether he would protect investors, or Wall Street, in the powerful job.

“You’ve spent your career protecting some of the biggest names on Wall Street, and those relationships pose a host of conflicts for this position,” Sen. Sherrod Brown, D-Ohio, ranking Democrat on the Senate Banking Committee, said at the hearing. “I’m concerned that you may need to recuse yourself too often at a time when we need a strong, independent SEC chair on the front line of enforcement, not watching from the sideline.”

As a partner at the prestigious New York law firm Sullivan & Cromwell, Clayton has helped online retailer Alibaba stage the largest initial public offering in history, assisted in the sale of the NBA’s Atlanta Hawks and worked closely with hedge fund tycoons.

Republicans said that type of experience will be valuable for the head of the SEC, which is charged with protecting investors, prosecuting financial crime and ensuring stock markets are run fairly.

But it’s Clayton’s 15-year relationship with Goldman Sachs that has drawn the most attention from critics. (He is also married to a Goldman Sachs wealth manager.)

In 2008, Goldman Sachs was facing a potential disaster: Its profits had started to wane and its stock price was tumbling. Facing doubts about whether it could survive the turmoil, Goldman launched a plan to turn itself into a traditional commercial bank.

Advising on the deal was Clayton. A year later, Clayton helped the bank again when it wanted to start paying back the $10 billion loan it had received from a taxpayer-funded bailout program.

Clayton, who made more than $7 million last year, was warmly received by Republicans on the committee, who praised his financial industry experience. It should be easier, and cheaper, for companies to sell stock on the public markets, Clayton told them.

Democrats repeatedly questioned whether Clayton would be tough on Wall Street. Clayton dodged questions about the best ways to hold corporate leaders responsible for wrongdoing whether they knew about the bad behavior conducted by lower level employees or not.

“I think individual prosecutions, particularly in the white collar area, has a significant affect on behavior,” Clayton said. “I want to be clear: Companies should be held responsible.”

In a heated exchange, Sen. Elizabeth Warren, D-Mass., noted that Clayton would be forced to recuse himself from cases involving former and current clients of his former law firm, Sullivan& Cromwell. In those cases, she said, if the rest of SEC’s four commissioners split along partisan lines, the investigations would stall and the firms could escape being held responsible.

“With you as SEC chair it looks like Wall Street can breathe a little easier,” Warren said.

If confirmed, Clayton would also play a key role in President Donald Trump’s efforts to roll back regulations on the financial industry, particularly 2010’s Dodd Frank law. “I don’t have any specific plans for attacks,” on the law, Clayton told the panel. But “I do believe Dodd Frank should be looked at.”



Keywords: Jay Clayton, SEC, Donald Trump