The opacity federal agencies are known for is less of a design feature than a by-product of a complicated world. Nobody necessarily hides how these organizations are run or what they do. But when at least dozen of these federal agencies exist – and maybe hundreds, depending on how you define “federal agency” – it can get a little overwhelming.
Even so, it is worth getting to know certain federal agencies. For everyone who is only tangentially active in the financial sector, the swearing-in of the new chairman of the US Securities and Exchange Commission (SEC), Gary Gensleris the perfect excuse for a quick look back and a glimpse of what to expect in the months ahead.
The The SEC is headed by five commissioners, each of which serves for a five-year term. The President of the United States appoints the five commissioners with the advice and approval of the Senate. The president also appoints one of the five commissioners to be the SEC chairman, the agency’s chief executive director. The terms of office are staggered so that the term of one of the five commissioners ends on June 5 of each year, although a commissioner can serve for approximately 18 months after his term expires if a replacement is not confirmed by then.
In the first months of 2021 Acting SEC Chairperson Allison Herren Lee was responsible for implementing the agency’s realignment, led by Joe Biden. Gary Gensler will now take over the management. His confirmation brings the five-member commission back on track. Of the five terms of office of the current commissioners, Ms. Lees is the first to expire in 2022.
The verification process for Mr. Gensler was relatively quick after he was selected by President Biden for the position of SEC chairman on February 3. On April 14, three Republican senators joined all Democratic senators in a Senate vote between 53 and 45 to endorse Mr. Gensler. Most Republicans were against the nomination because Mr. Gensler’s clear intention was to expand the SEC’s regulatory activities. After his confirmation vote, Mr. Gensler was sworn in on April 17th.
Republicans’ fears of increased regulatory efforts may be real. During his hearing for the confirmation of the Senate Banking Committee Mr. Gensler praised Bitcoin and other cryptocurrencies as a “catalyst for change”, but also emphasized his duty was “at its core, [to] Guarantee of investor protection. “
“I am concerned that he will induce the SEC to use its regulatory powers to advance a liberal social agenda that focuses on issues such as global warming, political spending disclosure, and racial inequality and diversity.” Republican Senator Patrick Toomey said during the debate about Mr. Gensler’s confirmation. Senator Toomey argued that the securities laws were not the “appropriate means” to address these issues.
Mr. Gensler’s cryptocurrency background is somewhat unique among those in SEC leadership roles. He is a senior advisor to the MIT Media Lab’s Digital Currency Initiative and has taught Blockchain Technology, Financial Technology, Digital Currency, and Public Policy courses as a professor at the MIT Sloan School of Management. Cryptocurrency lovers hope that the SEC, with Mr. Gensler as chairman, will finally approve an exchange-traded Bitcoin fund before the end of 2021.
Despite his standing on the fintech street, other aspects of Mr. Gensler’s résumé are fairly self-evident in the higher echelons of federal financial regulators. He is a former executive director of Goldman Sachs and served in the Clinton and Obama administrations.
“I feel incredibly privileged to be joining the team of notable SEC officials.” Mr. Gensler said in a public statement after he was sworn in. “As Chairman, I will be amazed by our mission every day: to protect investors, facilitate capital formation and promote fair, orderly and efficient markets. This mission helped make American capital markets the most resilient in the world. “
Well, I think we can all wish him every success on this broad mission. Of course, only time will tell what to expect on a more detailed level. But the smart money will need more robust regulation of the financial industry in the months ahead, and we might even see the SEC taking a direct approach to cryptocurrency markets, led by Chairman Gensler.
Jonathan Wolf is a civil litigation attorney and author of Your debt free JD (Affiliate link). He has taught legal writing, written for a variety of publications, and made it both his business and his pleasure to be financially and scientifically literate. Any views he expresses are likely pure gold, yet only his own and should not be attributed to any organization with which he is affiliated. He wouldn’t want to share the loan anyway. He can be reached at [email protected].