Wall Street's Favorite Bureaucrat--Now

THE kids on the block in Queens where William Casey grew up called him Cyclone because his angular body seemed to be constantly in motion. The nickname still fits Casey, who is now chairman of the Securities and Exchange Commission. His seven months in office have been filled with a bustle that the agency had seldom known in its first 37 years.

Under Casey's guidance, the SEC has moved briskly to enforce negotiated brokerage-commission rates on stock trades of more than $500,000, order stricter capital requirements for securities firms, tighten up corporate bookkeeping and require all companies whose stock is bought by the public to make fuller disclosures of financial information. Last week the SEC proposed new rules that would unequivocally prevent brokerage firms from using customers' cash and securities for their own purposes; the regulations would supersede New York Stock Exchange rules, which were not always obeyed. Next week Casey will conclude a month of hearings in Washington on a topic no less ambitious than the entire structure of the securities industry.

Zeal and Understanding. As if to heighten his aura of activity, Casey fills any gaps in his crowded schedule with press interviews, speaking engagements and visits to Wall Street trading floors. Such visibility is a striking contrast to the low profile maintained by the man he succeeded, Hamer Budge. Casey even matches the ebullience of Budge's predecessor, Manuel Cohen, whose activist zeal did not endear him to many securities men.

Casey, though, is held in surprising esteem by the Wall Streeters whom he regulates. "You get a sense that he listens," says William R. Salomon, managing partner of Salomon Brothers, one of the nation's largest investment banking firms, "and just as important, that he understands what you are talking about." Says an admiring Robert Haack, president of the New York Stock Exchange: "The man seems impatient with delay. Once he identifies a problem, he seems to want to solve it and move on to the next."

Casey's fans dismiss the fact that he stepped into his job with little Wall Street experience. He was a heavy contributor to the Republican National Committee and a law partner of its former chairman, Leonard Hall, before the President picked him for the SEC chairmanship last winter. The appointment ran into trouble in the Senate Banking Committee, where Casey was grilled at length about his role in three civil lawsuits between 1962 and 1965, two of which involved securities. He was finally approved by the Senate in March.

Dead Center. Casey's activism is popular partly because it comes at a crucial moment for the securities industry. Brokerage firms are staggering under rising costs and mountainous paperwork; 129 houses have been forced into liquidation or merger. Large money-managing institutions like mutual funds and insurance companies are seeking membership on the New York and American stock exchanges in order to save on brokerage commissions. Because of antitrust prodding by the Justice Department, negotiated commission rates will almost surely have to be extended to cover trades of less than $500,000. Regional stock exchanges and the "third market" of off-the-floor trading in listed shares are gaining volume at the expense of the two major exchanges. Some brokers warn that if computerized trading systems like one introduced this year by the National Association of Securities Dealers are expanded, major stock exchanges may no longer be needed.

Faced by such problems, brokers who once feared SEC supervision are now looking to the agency for leadership. "The feeling around here is that we've been on dead center too long and that Casey will get things moving," says William Salomon. "Even if he makes unpopular decisions, the mere fact that he is taking affirmative action will make most of us support him."

But will it really, though? Much of Casey's popularity stems from the fact that no one yet knows where he stands on the big issues. His reforms so far have been needed and overdue, but relatively uncontroversial. His hearings seem designed largely to give him a quick education in Wall Street's problems. Many of the same difficulties are being investigated separately by Senate and House committees; Casey denies that the SEC hearings are intended to beat Congress to the punch, but with characteristic alacrity he has promised to have a full set of conclusions and recommendations ready early next month.

Divided Street. When they are released, it is hard to see how Casey's honeymoon with all of Wall Street can continue for very long. At the moment securities men believe that Casey is inclined to give them what they want, and he does not dispute that. "I'm certainly not unfriendly to Wall Street," he says. "My purpose is to see that Wall Street serves the public interest. I can induce them into taking action, but I cannot do that if I come screaming at them."

Wall Street, however, cannot agree on what it wants; Casey's hearings have disclosed bitter division on all the large issues. Major brokerage firms like Merrill Lynch, for example, would like to see negotiated commissions rather than fixed rates on almost all stock trades, so that they could compete more effectively with the rates arrived at by bargaining between investors and brokers who are not members of large stock exchanges. Smaller brokers fear that the resulting commission cutting would bring about a catastrophic loss of revenue. For the moment, each side can hope that the SEC chairman will decide in its favor. But when Casey finally comes to bat on the main issues, he is sure to alienate some Wall Streeters. He will need all the popularity he has won among the others in order to get his decisions accepted.

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