Democrats turn on Biden SEC chair over increased regulation
One Democrat called Gensler 'a politician masquerading as a regulator'
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Some House Democrats and Biden administration officials appear to be souring toward Securities and Exchange Commission (SEC) Chairman Gary Gensler over his readiness to increase regulation on certain financial industries.
An already frequent target of Republican attacks, Gensler has ended 2023 drawing sharp criticism over what some have called his "outsized influence" when it comes to 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.
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SEC Chairman Gary Gensler participates in a meeting of the Financial Stability Oversight Council at the U.S. Treasury on July 28, 2023, in Washington, DC. The council met to deliver an update on the Council’s Climate-related Financial Risk Committee (Kevin Dietsch/Getty Images / Getty Images)
Torres, a supporter of the cryptocurrency industry, has been increasingly critical of Gensler, who has attempted to exercise greater authority over the market by implementing more rules for investment in the wake of cryptocurrency exchange FTX's collapse last year.
The congressman grilled Gensler in a September House Financial Services Committee hearing over "investment contracts," which he said are "key to determining [Gensler's] authority over crypto."
In October, Rep. Steven Horsford, D-Nev., raised concerns about Gensler's rulemaking and how it could negatively impact small businesses during an interview with Punchbowl News.
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"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.
Rep. Ritchie Torres, D-N.Y., questions Federal Reserve Chairman Jerome Powell during the House Financial Services Committee hearing titled "The Federal Reserve's Semi-Annual Monetary Policy Report," in Rayburn Building on Wednesday, June 21, 2023. (Tom Williams/CQ-Roll Call, Inc via Getty Images / Getty Images)
"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, Rep. Wiley Nickel, D-N.C., argued for the importance of Congress weighing in on regulator's decisions, such as those coming from Gensler and the SEC.
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"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.
Also in November, Biden administration officials 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, expressed concern over proposed changes to the SEC's Custody Rule, which requires "investment advisers to safeguard client funds and securities in their possession or where they have authority to obtain possession of them."
Representative Wiley Nickel, a Democrat from North Carolina, speaks during the DC FinTech Week event in Washington, DC, US, on Tuesday, Nov. 7, 2023. (Ting Shen/Bloomberg via Getty Images / Getty Images)
Some Republicans argued the proposed rule changes concerning cash assets on balance sheets could make a "material impact on bank balance sheets."
Hsu admitted his department had "some concerns" with the proposed changes, while Barr argued it "would be a significant change in custody practices at banks," and that he had shared his concern with the SEC.
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Earlier this year, a pair of House Republicans introduced a bill to remove Gensler from his post, citing his "long series of abuses that have been permitted under the current SEC structure."
The bill, called the SEC Stabilization Act, would restructure the SEC to redistribute power from the chair to other commissioners, add a sixth commissioner to the body, and create an executive director position to oversee day-to-day operations.
Fox Business has reached out to Gensler's office for comment.
Fox News' Houston Keene contributed to this report.