WASHINGTON (CNNMoney.com) -- The Securities and Exchange Commission chief on Thursday faced angry lawmakers who grilled her about why she let her top attorney work on the Bernard Madoff Ponzi scheme case -- knowing his late mother was a Madoff investor.
Mary Schapiro said she now wishes David Becker, who was her general counsel from February 2009 through last month, had dropped his involvement of the Madoff case.
Had she known then, what she knows now, Schapiro said: "I wish that Mr. Becker had recused himself. Absolutely."
In February 2009, Becker told Schapiro that a deceased relative had a closed account as an investor in Bernard Madoff.
Schapiro said that, at the time, it didn't raise red flags. But she expected Becker to check with the SEC's ethics officer -- who ruled that Becker could work on the case. That ethics officer reported directly to Becker, SEC officials confirmed during the hearing.
"I didn't think the account of a long-deceased relative would cloud his work," Schapiro said.
Becker then went on to oversee the SEC's legal work on the Madoff case, which included evaluating the amount victims who were account holders on the day of the fraud could claim as losses.
Last month, the Madoff trustee, Irving Picard of Baker & Hostetler, announced a $1.5 million clawback lawsuit against Becker and his two brothers -- heirs to the estate of their mother, Dorothy Becker.
Dorothy Becker had invested roughly $500,000 with Madoff. After she died, the Becker brothers had withdrawn $2 million on behalf of the estate in 2004. Picard wants the family to return everything but their original investment.
Schapiro said she now appreciates "the potential of this issue to raise the appearance of a conflict."
She pledged to work to "heighten sensitivity to issues like this" throughout the agency, recognizing that such conflicts cause the public to distrust her agency, which is tasked with watching Wall Street.
"I've worked so hard in the last two years to put this agency back on the right path," she said. "It infuriates me, because most people are working their hearts out every single day."
But still, she faced more questions.
"Mr. Becker's work, in retrospect, was not a good idea," said Rep. Darrell Issa, a California Republican who runs the House Oversight Committee. "How can we know that the changes you're asking to be reviewed are going to clearly eliminate any conflicts like this in the future?"