Rep. Ralph Norman, R-R.C., discusses his letter to SEC Chairman Gary Gensler and FINRA regarding Meta Materials stock on making money.
Some Democratic representatives in the House of Representatives and the Biden administration appear angry at Securities and Exchange Commission (SEC) Chairman Gary Gensler for his willingness to increase regulation of certain financial industries.
Gensler, already a frequent target of Republican attacks, issued sharp criticism in late 2023 of his “outsized influence” in setting and enforcing rules.
“Gary Gensler is a politician posing as a regulator,” said Rep. Ritchie Torres, D-N.Y. said, according to a November report from Fortune.
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SEC Chairman Gary Gensler attends a Financial Stability Oversight Council meeting at the U.S. Department of the Treasury in Washington, DC on July 28, 2023. The Council met to provide an update on the Council's Climate-Related Financial Risks Committee… (Kevin Dietsch/Getty Images / Getty Images)
Torres, a cryptocurrency industry advocate, has been increasingly critical of Gensler, which has sought to exert greater authority over the market by imposing more investment rules following the collapse of cryptocurrency exchange FTX last year.
The congressman grilled Gensler in a House Financial Services Committee hearing in September on “investment contracts,” which he said were “key to the decision.” [Gensler’s] Authority over crypto.”
In October, Rep. Steven Horsford, D-Nev., raised concerns about Gensler's rulemaking and the potential negative impact on small businesses during an interview with Punchbowl News.
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“I respect his career and his years of service. But I think it's important that in this moment that we're in, we don't make regulations based on what happened 10 or 20 years ago,” he said.
Rep. Ritchie Torres, D-N.Y., questions Federal Reserve Chairman Jerome Powell during the House Financial Services Committee hearing entitled “The Federal Reserve's Semiannual Monetary Policy Report” on Wednesday, June 21, 2023, at Rayburn Building. (Tom Williams/CQ-Roll Call, Inc via Getty Images / Getty Images)
“Our economy is dynamic. AI is dynamic, it will change the way we work in this country, won't it? “And at a time when regulations are being passed, we need to make sure they reflect the changing dynamics of our economy,” he said, before urging Gensler to be clear that regulations have real impacts on minority communities , while trying to target specific industries.
In November, Rep. Wiley Nickel, D-N.C., argued the importance of Congress having influence over regulators' decisions, such as those made by Gensler and the SEC.
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“It is our job. So I think it's important to try to reclaim that as much as possible. And the regulators, the SEC and many others have an outsized influence… I mean, we have expressed our concerns publicly and privately for Gary Gensler's regulation through enforcement. The best way I can explain it is that I encouraged them to consider something less rigorous. I think that would serve the industry better. And I hope they end up there,” he said.
Also in November, Biden administration officials Michael Hsu, the acting Comptroller of the Currency, and Michael Barr, the vice chairman for oversight of the Board of Governors of the Federal Reserve System, met. expressed concerns about the proposed changes under the SEC's Custody Rule, which requires investment advisers to “protect client funds and securities in their possession or which they are authorized to possess.”
Representative Wiley Nickel, a Democrat from North Carolina, speaks during the DC FinTech Week event in Washington, DC, USA, on Tuesday, November 7, 2023. (Ting Shen/Bloomberg via Getty Images / Getty Images)
Some Republicans argued that the proposed rule changes regarding cash balances on balance sheets could have a “significant impact on bank balance sheets.”
Hsu admitted that his department had “some concerns” about the proposed changes, while Barr argued that it “would be a significant change to bank custody practices” and that he had communicated his concerns to the SEC.
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Earlier this year, two House Republicans introduced a bill to remove Gensler from his post, citing his “long history of abuses permitted under the current SEC structure.”
The bill, called the SEC Stabilization Act, would restructure the SEC to redistribute power from the chairman 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.