Democrats press Trump SEC nominee for Wall Street regulator

President Donald Trump's pick to serve as the chief US financial markets regulator defended himself Thursday against charges his career as a Wall Street lawyer could hinder his ability to oversee the industry effectively.

Nominated to head the Securities and Exchange Commission, Walter "Jay" Clayton's clients have included major financial institutions such as Goldman Sachs, Barclays and Deutsche Bank.

But during his Senate confirmation hearing, he pledged he would leave "zero room" for financial wrongdoing in US capital markets.

Clayton's nomination to lead the SEC comes as the Trump administration has promised to dramatically scale back all types of regulation, which has led to heated controversy over alleged conflicts of interest arising from the business interests of Trump and other officials.

Trump notably promised to "do a number" on the 2010 Dodd-Frank Wall Street reform legislation, which imposed tougher safeguards on banks and the financial industry in response to the 2008 crisis.

The SEC has faced criticism for failing to finalize many of the rules required under Dodd-Frank, nearly seven years after its enactment.

Clayton, who is expected to win confirmation from the Senate's Republican majority, said he had "no specific plans" to attack Dodd-Frank, but would support a review of existing rules to see whether they have been effective.

He also said he would enforce securities laws strictly.

"I have zero tolerance for bad actors," Clayton said. "I'm not only saying it here. I will say it to the staff at the SEC. I will say it to my fellow commissioners."

But Democratic Senator Elizabeth Warren of Massachusetts said the SEC's effectiveness could be undermined since Clayton's long list of powerful clients at the Wall Street law firm Sullivan & Cromwell would require him to recuse himself from many cases that come before the commission.

Without a chairman to cast a tie breaking vote, the remaining four commissioners could deadlock if they vote along party lines, therefore preventing the SEC from enforcing the law, she warned.

In addition to the chair, the SEC has commissioners from each party, Democratic and Republican.

"Any reasonable strategic company that wanted to avoid an enforcement action could simply hire Sullivan & Cromwell and then you couldn't vote for enforcement," Warren said.

"If President Trump wanted to make sure that the SEC would have a hard time in going after his Wall Street friends you would be the perfect chair."

Warren cited media reports saying former SEC chair Mary Jo White had to recuse herself no fewer than 48 times due to conflicts of interest arising from her own former clients and her those of her husband.

Clayton's conflicts were potentially worse, Warren said.

But he said his recusals would not necessarily hinder the commission's work.

"The question of whether I'm recused from a matter doesn't mean there will be deadlock," he said.