In a withering and one-sided barrage, Republican members of the GOP-led House Financial Services Committee attacked Securities and Exchange Commission Chair Gary Gensler at a hearing Wednesday, accusing him of a “radical agenda” that includes proposing 50 new rules they said would harm the markets, investor protection and the nation’s economic competitiveness.
Chairman Patrick McHenry accused Gensler of a “reckless approach to rulemaking, lack of capital formation agenda, crusade against the digital asset ecosystem and lack of responsiveness to Congress.
“This means in the last five months [since Gensler last testified] you’ve done nothing to remedy the legitimate and often bipartisan concerns expressed by this committee. Let me be clear Chairman Gensler, our patience is wearing thin,” McHenry said.
In prepared testimony released ahead of the hearing, Gensler said “it’s appropriate that the SEC freshen up its rules to promote efficiency and competition in the more than $40 trillion equity markets. Key aspects of our rules for the national market system haven’t been updated since 2005,” he added, likening the U.S. capital markets to an Olympic gold medal winner.
“With all due respect, Mr. Chairman, if the U.S. capital markets are a gold medalist, you are the Tonya Harding of securities regulation, because you are kneecapping the U.S. capital markets with the avalanche of red tape coming out of your commission,” Rep. Andy Barr, a Republican from Kentucky, said.
Ahead of today’s hearing, all Republicans on the committee sent a letter to Gensler demanding the agency stop finalizing or implementing all new rules until it conducts a comprehensive cost-benefit analysis of their aggregate impact.
Republican members also demanded the agency “propose a reasonable, workable, and staggered schedule for public comment on the adoption and implementation of the proposals, considering their overlapping nature, significant compliance and operational burdens” which they said may be insurmountable for smaller or emerging firms.
The rules are related, and even if implementation were to be staggered “it will risk stultifying U.S. capital markets, and, ultimately, U.S. competition,” GOP lawmakers argued.
The SEC’s Inspector General’s said in a statement last October that SEC staff “are increasingly concerned about the ‘aggressive agenda’ and shortened comment periods. These limitations have resulted in reduced feedback during rulemaking and insufficient time for staff research and analysis, including cost-benefit analysis,” committee members said.
The Department of Justice also raised similar concerns regarding the agency’s failure to analyze the aggregate impact of rulemaking, submitting a comment letter emphasizing the regulator’s need to assess the potential interactions of substantial, often interlocking proposals, lawmakers noted.
Rep. Scott Fitzgerald of Wisconsin was among a number of committee members who pressed Gensler on when he would approve the first spot bitcoin ETF now that the U.S. Court of Appeals for the District of Columbia ruled that the SEC’s rejection of the firm’s application was “arbitrary and capricious.”
“Now that you have the lawsuit in hand…how do you explain the SEC’s action?” Fitzgerald asked.
Gensler declined to say if or when the SEC planned to approve the first spot bitcoin ETF. “We’re still considering the decision…I don’t want to get ahead of my staff and fellow commissioners,” he said.