Several House Democrats and members of the Biden administration seem to be growing disillusioned with SEC Chairman Gary Gensler’s inclination to intensify regulations in specific financial sectors.
Despite being a consistent target of Republican criticism, Gensler faces heightened scrutiny as 2023 concludes, with some expressing concerns about his perceived “outsized influence” in rulemaking and enforcement.
“Gary Gensler is a politician masquerading as a regulator,” Rep. Ritchie Torres, D-N.Y. said, according to a November report by Fortune.
Torres, an advocate for the cryptocurrency sector, has grown more vocal in his disapproval of Gensler. The SEC Chairman’s efforts to assert greater control over the market through increased regulations, prompted by the collapse of cryptocurrency exchange FTX last year, have been met with criticism from Torres.
In a September House Financial Services Committee hearing, the congressman extensively questioned Gensler on the matter of “investment contracts,” highlighting their significance in defining Gensler’s authority in the realm of cryptocurrency.
In October, Representative Steven Horsford from Nevada expressed apprehensions about Gensler’s rulemaking and its potential adverse effects on small businesses in an interview with Punchbowl News.
“I respect his career and his longevity of service. But I think that it’s important that in this moment that we’re in that we’re not adopting regulations based on what was happening 10 and 20 years ago,” he said.
“Our economy is dynamic. AI is dynamic, it’s going to change the way work works in this country, right? And at a time when we have regulations that are being adopted, we need to make sure that they are taking into account the changing dynamics of our economy,” he said, before calling on Gensler to realize that regulations have real consequences on minority communities while trying to target certain industries.
In November, Representative Wiley Nickel from North Carolina emphasized the significance of Congress providing input on regulatory decisions, including those made by Gensler and the SEC.
“It’s our job. So I think it’s important to try to reclaim that as much as we can. And the regulators, the SEC, many others have an outsized influence … I mean, we’ve made our concerns known publicly and privately for Gary Gensler’s regulation by enforcement. The best way I can explain it is that I’ve encouraged them to consider a little less stick. I think that would better serve the industry. And I hope that’s where they end up,” he said.
In November, Biden administration figures Michael Hsu, the acting comptroller of the currency, and Michael Barr, the vice chair for supervision of the Board of Governors of the Federal Reserve System, voiced reservations about the suggested alterations to the SEC’s Custody Rule. This rule mandates investment advisers to protect client funds and securities under their control or where they have the authority to acquire possession of them.
Certain Republicans contended that the proposed rule modifications related to cash assets on balance sheets might have a “material impact on bank balance sheets.”
