Why Mary Jo White is the wrong pick for the SEC

January 30, 2013, 2:02 PM UTC

FORTUNE — Imagine waking up one morning and reading a speech made by one of your bosses, where you discover just how little he values the projects you’ve been slaving away at for the last two-and-a-half years. Summing up his views, your efforts have involved “a solution in search of a problem.”

Then, one week later, you learn that your likely new boss has spent the last decade ensuring your work didn’t succeed. Welcome to life at the SEC.

Earlier this month, statements by SEC Commissioner Daniel Gallagher at the U.S. Chamber dismissed the hard work of the regulator’s staff on Dodd-Frank and the Volcker rule. And last week, President Obama nominated an SEC chair that is likely to have a chilling effect; not on the actions of white-collar criminals, but on the work of the SEC’s civil servants.

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President Obama had options. But he chose Mary Jo White, who runs white-collar defense at Debevoise & Plimpton. (White defended Fortune’s parent company, Time Warner, in a suit filed by Donald Trump over a book it published, TrumpNation.) She has worked for that firm off and on for two decades, with shorter stints as a prosecutor.

The nomination has received high marks from, among others, someone the SEC is examining for potential disclosure violations. Jamie Dimon, CEO of JP Morgan — which has used White’s services related to alleged financial crisis wrongdoing — has given White two thumbs up, deeming her a “perfect choice.” As SEC chair, will she ensure the JP Morgan disclosure review moves forward — or will it be dropped, as White has succeeded in doing over many years for her white-collar clients?

White’s husband, John, like Mary Jo, has weaved in and out of public service and is back earning the big bucks at corporate law firm Cravath, Swaine, & Moore, which has also represented JP Morgan (JPM). From 2006 through 2008, he headed the SEC’s division of corporation finance, which oversees corporate disclosures. In the run up to the recent financial crisis, his oversight of Wall Street’s risk disclosures was ineffective, one reason cited for the severity of the crisis.

If White intends to perform her SEC chair role well, she will have to be willing to lose not only the esteem of her own social circle but also the approval of the one her husband will continue to embrace. That is a tough, perhaps impossible, sacrifice to ask of anybody.

Lawyers may pride themselves on their objectivity and their ability to move from the public to private sector and back again. But those who do their public jobs well are more likely to find there are no bridges back.

Bob Monks, former partner at law firm Goodwin Proctor, says he remembers a conversation he had at the Getty Foundation offices with former SEC Chair Harold Williams. Williams told Monks that following his SEC service, he knew a few people would be offended by his advocacy for governance reforms and that he would not be invited to join new boards, but he never imagined that he would not be invited to rejoin the boards on which he had previously served. Harold Williams told me that, in fact, this was the case in the end.

Is White willing to face the ostracism that would come from advancing the public’s cause? Monks notes that she is being “put into [a] position to make decisions that might offend [her] former and future clients,” which, as with other  “Obama Administration appointees … raises serious questions as to whether the appointment serves the public interest.”

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But even if she is determined to take on these trials, her nomination sends negative signals to the SEC’s rank and file. Working on behalf of the Morgan Stanley (MS) board, she intervened in the Pequot insider trading matter. According to a timeline produced by the Senate minority staff of the Committee on Finance and the Committee of the Judiciary, Paul Berger, the SEC’s then associate director of enforcement, was instrumental in firing the SEC investigator Gary Aguirre, who wanted to interview soon-to-be Morgan Stanley CEO John Mack about whether he had passed an insider tip to Pequot. Soon after, the SEC dropped any plans to interview Mack, Berger indicated interest in working at Debevoise to Mary Jo White through a colleague, and landed a spot at the firm. He’s still there. Aguirre filed for wrongful dismissal and won a record award.

Will enforcement be tougher under her leadership, as some claim? In an interview in 2005, she took credit for establishing a practice that many believe has ensured no Wall Street prosecutions in the wake of the crisis:  “the first deferred prosecution agreement involving a major company.”

There are other distasteful historical facts too, including White’s support of Michael Mukasey for US attorney general. Mukasey became attorney general and supported the legality of the CIA’s harsh interrogation and waterboarding techniques.

Maybe White will set aside her past and the possibility of future alliances. But why didn’t the president pick someone who wouldn’t have to?

Eleanor Bloxham is CEO of The Value Alliance and Corporate Governance Alliance (http://thevaluealliance.com), a board advisory firm.