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Politics

A New Securities and Exchange Commission Chairman

SEC member Elisse Walter will take Mary Schapiro's place as top dog, at least through 2013.

The new cop on the Wall Street beat will have plenty to keep her busy. Elisse Walter, currently a member of the Securities and Exchange Commission, will take over as chairman when Mary Schapiro steps down on December 14, after four grueling years on the job. President Obama has designated Walter -- a career regulator, like Schapiro -- to take her place, at least for now.

Walter's term as commissioner can run to the end of 2013, during which she can serve as chairman. But to keep the top job after 2013, she will have to be nominated and confirmed by the Senate. But observers say other candidates are being vetted for the position as well, including Sallie Krawcheck, a former exec at Citigroup and Bank of America. Other potential candidates include Richard Ketchum, chief executive of the Financial Industry Regulatory Authority (Finra) and a former director of the SEC's Market Regulation unit, and Robert Khuzami, the hard-charging SEC enforcement director.

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Whoever gets the nomination will inherit a big chunk of Schapiro's unfinished agenda. Some two and a half years after the enactment of the Dodd-Frank legislation, little more than one-third of the rules needed to implement the massive financial-reform law have been finalized.

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Money-market reform is more unfinished business. Schapiro tabled rulemaking at the SEC last summer after failing to sell a majority of commissioners on the need for floating net asset values that reflect the actual market value of money-market portfolios, or an increase in capital buffers at fund sponsors and limited redemptions by investors in a crisis. The Financial Stability Oversight Council, charged with protecting the country's financial system from debilitating shocks, could press the SEC to take up the reforms.

Other priorities will include adopting crowdfunding and other rules for the controversial Jumpstart Our Business Startups Act, and determining the risks to the market posed by high-tech trading strategies. For now, Schapiro's departure leaves the SEC with just four commissioners, evenly split between Democrats and Republicans -- a recipe for gridlock, some say.

Walter and Schapiro share similar philosophies on many issues. Their careers have overlapped at the Commodity Futures Trading Commission and Finra, and in earlier stints at the SEC. Whatever other qualities are essential in a chairman, one is a thick skin, says Barbara Roper, director of investor protection at the Consumer Federation of America. "If they do anything that approaches a decent job for investors, they can expect to be under constant, often nasty partisan attacks from members of Congress," she says. "You need someone who's not bothered by that kind of bullying."

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