To make matters worse, White isn't the only recent appointee with little or no market experience. The pick to be Tim Geithner's replacement at the Treasury Department, Jacob Lew, has spent most of his career in Washington focused on budget issues. He too has never been a regulator before. Both White and Lew might work out great, but they seem like odd choices from Obama after fighting so hard for Wall Street reform.
A number of people I talked to said White's lack of experience as a regulator won't be a problem. Her husband, John White, previously served as the head of SEC's capital market division. She was also a board member of Nasdaq. And lots of people want to work with her. "Her Rolodex is as broad as anyone I know," says Arthur Levitt, a former chairman of the SEC.
But it's a question of focus, and White's focus has never been on regulation. The real failure of the SEC under Chris Cox in the run up to the financial crisis was not a lack of enforcement, it was a lack of oversight. Shapiro, and her experience as a regulator, was a reaction to that. So we got a regulator at a time when we probably needed an enforcer. And in the same way White is a reaction to the shortcomings of Schapiro. Hopefully, White will be able to rise above her own.