As 2023 draws to a close, internal dissent is emerging among House Democrats and officials in the Biden administration regarding the regulatory strategies of Securities and Exchange Commission (SEC) Chairman Gary Gensler. Criticized by Republicans in the past, Gensler now faces discontent from his own party due to his aggressive regulatory stance on various financial sectors.
Representative Ritchie Torres of New York, a Democrat and an advocate for the cryptocurrency sector, has voiced increasing disapproval of Gensler’s approach, especially following the collapse of the cryptocurrency exchange FTX. Torres, in a recent Fortune report, described Gensler as a “politician masquerading as a regulator,” challenging his expansive control over the cryptocurrency market and the new rules he has sought to implement.
In a House Financial Services Committee session in September, Torres interrogated Gensler on his jurisdiction over cryptocurrencies, particularly concerning “investment contracts.” This discussion underscores the growing tension between Congress and the SEC on regulatory reach.
Representative Steven Horsford of Nevada, also a Democrat, expressed his concerns to Punchbowl News about Gensler’s regulatory actions potentially hindering small businesses. He emphasized the need for contemporary regulations that reflect the dynamic nature of today’s economy, including the impact of artificial intelligence. Horsford highlighted the unintended consequences these regulations could have on minority communities.
In November, North Carolina Democrat Representative Wiley Nickel stressed the importance of congressional oversight over regulatory bodies like the SEC. He criticized Gensler’s “regulation by enforcement” approach, advocating for a more balanced regulatory strategy that would better support industry growth.
Adding to this chorus of concern are Biden administration officials Michael Hsu, acting comptroller of the currency, and Michael Barr, vice chair for supervision of the Federal Reserve Board. They expressed apprehensions over proposed changes to the SEC’s Custody Rule, which governs how investment advisers manage client funds. The proposed modifications, they argue, could significantly alter custody practices in banks and impact bank balance sheets.
These critiques come in the wake of a legislative move by House Republicans earlier this year. They introduced the “SEC Stabilization Act,” aimed at diminishing Gensler’s authority by redistributing power within the SEC, adding a sixth commissioner, and establishing an executive director for day-to-day operations.
Fox Business has attempted to contact Chairman Gensler’s office for a statement on these developments.