SAN FRANCISCO (Reuters Breakingviews) - He’s back. Former banker-turned-industry critic Gary Gensler is in the running as U.S. President-elect Joe Biden’s pick to lead the Securities and Exchange Commission, Reuters has reported. That will rankle the finance industry, which is still smarting from Gensler’s years at the Commodity Futures Trading Commission under Barack Obama. If he takes the helm at the SEC, tougher enforcement is likely.
Gensler was a thorn in Wall Street’s side in his previous political incarnation. At the CFTC, he was charged with injecting more transparency into the opaque parts of derivatives trading after the 2008 financial crisis. He moved more quickly than the SEC to implement new measures and also pushed for a tough definition of what kind of proprietary trading would be allowed under the so-called Volcker rule.
Reining in bad behavior was another priority. Under Gensler, the CFTC brought cases against banks for rigging the Libor benchmark rate. His background in the finance industry helped make him a more effective regulator. He spent nearly 20 years at Goldman Sachs, where he was co-head of finance dealing with treasury departments at governments and companies.
Potentially placing him at the SEC is an indication of what Wall Street can expect in the next administration. Gensler could crack down on blank-check companies to require greater disclosures and more protection for investors. High-profile companies in private equity and hedge funds may also be a target over fees they charge.
Climate change, diversity and other issues important to progressives could also be on the agenda. Gensler was one of the few regulators that drew praise from the likes of liberal Senator Elizabeth Warren. At the SEC, companies may be expected to detail climate change risks or face more demands on disclosing diversity. Cryptocurrencies and blockchain could also be a focus since Gensler has been teaching courses on those issues at the Massachusetts Institute of Technology.
Progressives are also pressuring the Biden team to name Wall Street critics to lead the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the Consumer Financial Protection Bureau. If they share Gensler’s views, Wall Street will be kept on its toes for the next several years.
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