In nominating Gary Gensler to serve as chairman for the Securities and Exchange Commission, President-elect Joe Biden is likely to please progressives, who have been agitating for more bank oversight after four years of deregulatory policy under President Donald Trump’s SEC pick, Jay Clayton, who stepped down in December.
“Gensler is a terrific choice to head the agency,” said Barbara Roper, director of investor protection at the Consumer Federation of America. “He’s as knowledgeable about the markets as anyone on Wall Street, so he can’t be intimidated. He’s a seasoned regulator who knows how to get things done.”
Gensler spent 18 years at Goldman Sachs before joining the Treasury Department during the Clinton administration. Following a stint at the Commodity Futures Trading Commission — where he earned a reputation as a tough regulator — he served as an economic adviser for Hillary Clinton’s 2012 and 2016 Presidential bids, and since the 2020 election, he has led the Biden transition team’s financial regulatory group.
At the CFTC, “Gary proved he was relentless and effective at adopting and implementing difficult rules. He worked very quickly, very thoughtfully, very aggressively,” said Tyler Gellasch, executive director of investor advocacy group Healthy Markets.
“The number one selling feature for Gary is his ability to cut through the noise and keep moving. He was also able to defend his rules,” Gellasch said.
The Biden administration will likely look to Gensler, who teaches a class on blockchain technology at MIT, to craft regulatory guidelines around cryptocurrency.
The left flank of the Democratic party has pushed back on potential Cabinet and agency picks with Wall Street backgrounds, preferring candidates drawn from the ranks of academia and left-leaning think tanks. But observers say Gensler’s effectiveness at pursuing and successfully implementing regulatory reforms in the wake of the financial crisis was due, in a large part, to his deep first-hand knowledge of the sector’s inner workings.
Financial policy experts say unwinding the work of his predecessor is likely to be at the top of Gensler’s to-do list.
“I expect the SEC’s priority in the Biden administration will first and foremost be investor protection,” said Karen Shaw Petrou, co-founder of Federal Financial Analytics, a financial-policy consulting and analysis firm. These actions would likely include reinstating an Obama-era rule compelling brokers to work in their clients’ best interests, she added. “These could help retail investors by reducing conflicts of interest.”
Progressives are agitating for a new financial regulatory regime that will push companies to incorporate worker and shareholder equity, racial justice and environmental issues into their disclosures. “There is a pent-up demand to modernize our public company disclosures to address concerns about environmental, social and governance issues, which I think will make that an early priority,” Roper said.
“I think a lot of the agency’s agenda will focus on what I would call basic corporate accountability,” Gellasch said, adding that the SEC needs to “ensure it is pulling a lot of the private equity and venture capital and private debt markets back into a regulated space.”
The Biden administration will likely look to Gensler, who teaches a class on blockchain technology at MIT, to craft regulatory guidelines around the nascent field of cryptocurrency.
Financial-reform advocates also want to require companies to provide more disclosure about their PAC donations — a topic that has seen renewed focus in recent days, as much of corporate America pledged to reexamine its political spending in the wake of the Capitol riot.
“The SEC sets the rules for what information companies disclose and what investors and the public can do with that information,” Gellasch said.