Democrats Turn On Biden SEC Chair

By Robert Cunningham, updated on December 25, 2023

SEC Chairman Gary Gensler is facing bipartisan criticism over his regulatory approach.

Growing discontent among legislators signals a rocky path for SEC Chairman Gary Gensler's regulatory policies.

The year's end has not been kind to Gary Gensler, the Chairman of the Securities and Exchange Commission (SEC). Criticism is not a stranger to the halls of financial regulation, but the recent dissent concerning Gensler's tactics includes an increasing number of voices from his own political tent. Some House Democrats, traditionally allies in regulatory matters, have joined a chorus of concern that echoes that of Biden administration officials and Republicans, all apprehensive about Gensler's regulatory reach.

Increasing Pressure from Democrats and Republicans

Gary Gensler, appointed by President Biden to lead the Securities and Exchange Commission (SEC), has recently come under fire from members of his own party. Representatives Ritchie Torres (D-N.Y.), Steven Horsford (D-Nev.), and Wiley Nickel (D-N.C.) have voiced concerns over Gensler's regulatory strategies. Their criticisms focus on aspects ranging from cryptocurrency market regulation to the broader impact on small businesses.

Rep. Torres has been particularly vocal, criticizing Gensler for his approach to defining "investment contracts" in the cryptocurrency market. This scrutiny was evident during a House Financial Services Committee hearing, where Torres grilled Gensler on these issues. Additionally, the Biden administration's officials, Michael Hsu and Michael Barr, have raised concerns over proposed changes to the SEC's Custody Rule.

On the Republican front, Gensler has been a longstanding target. The criticism intensified towards the end of 2023, centering around his perceived "outsized influence" in rulemaking and enforcement. Republicans have argued that Gensler's proposed rule changes could significantly impact bank balance sheets, reflecting a broader discontent with his regulatory style.

The Ripple Effect of Gensler's Approach

Rep. Horsford emphasized the dynamic nature of today's economy and the need for regulations to adapt accordingly. His concerns reflect a growing sentiment that Gensler's approach might not align with the evolving economic landscape, especially considering the influence of AI and other technological advancements. Horsford's comments underline the importance of forward-thinking in regulatory practices.

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."

Rep. Nickel, meanwhile, has underscored the importance of Congress's oversight role over regulators like the SEC. Advocating for a more balanced approach, Nickel has expressed a preference for a less aggressive regulatory stance. This view resonates with a segment of legislators who believe in moderation and careful deliberation in rulemaking.

In the background of this unfolding drama, the collapse of the cryptocurrency exchange FTX last year remains a significant event. This incident has likely influenced the current discourse on regulatory approaches in financial markets, particularly in the volatile cryptocurrency sector.

Legislative Responses and Public Reaction

The discontent with Gensler's leadership has led to tangible legislative action. House Republicans introduced the SEC Stabilization Act, a bill aiming to redistribute power within the SEC and add a new executive director position. This move indicates a strong desire for change in the Commission's structure and governance.

Fox Business sought comments from Gensler's office regarding these developments, highlighting the media's interest in this unfolding story. The response from Gensler's office, if any, could provide further insight into the SEC's stance amidst this growing controversy.

The public and political response to these events will be crucial in shaping the future of financial regulation in the United States. As the story develops, it will be interesting to see how the Biden administration and Congress navigate these choppy regulatory waters.

Conclusion

This unfolding story reflects a significant shift in political dynamics, with bipartisan criticism of SEC Chairman Gary Gensler's regulatory approach.

  • SEC Chairman Gary Gensler faces criticism from both Democrats and Republicans over his regulatory approach.
  • Concerns center around cryptocurrency regulation, its impact on small businesses, and the dynamic nature of the economy.
  • House Republicans introduced the SEC Stabilization Act, proposing structural changes to the SEC.
  • The role of Congress in overseeing financial regulators has become a focal point in this debate.
  • The outcome of this controversy could significantly influence future financial regulations in the U.S.

About Robert Cunningham

With years of experience at the forefront of political commentary, Robert Cunningham brings a blend of sharp wit and deep insight to his analysis of American principles at the Capitalism Institute.

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