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| By Declan Harty |
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Gary Gensler has a final word of caution for Washington: Don’t tread on the SEC. On the eve of a new administration that has vowed to overhaul the federal bureaucracy, the outgoing Wall Street regulator told your MM host that the Securities and Exchange Commission is bound to play a critical role in the years ahead. Uncertainty is “on the horizon,” Gensler said — and, “for a successful economy, you need a successful and well-funded SEC.”
“If you want to disrupt the capital markets, you disrupt the SEC,” Gensler said in an interview this week. “You need the strong market oversight [of a] functioning agency that, yes, is a cop on the beat as well.” The SEC chair’s warning underscores the potential dangers of President-elect Donald Trump’s looming push to slash both the power and size of federal agencies across the government. Conservatives, some financiers and many in the cryptocurrency markets have cheered efforts to rein in the SEC, and the incoming administration appears primed to take a new look at the agency. (Of course, the cost-cutting crusade is being taken on alongside noted SEC critic Elon Musk, who was just sued by the agency. Gensler declined to discuss the Musk lawsuit with MM.) But Gensler cautioned that expected changes to the tax code, tariffs and immigration policy could all have major impacts on the economy — and, as a result, the markets. The SEC, he said, will need to be there to make sure nothing breaks. “You’ll need a great SEC to monitor the markets and ensure for the orderly functioning of the markets as [they] reprice” to new policies, changes in inflation and shifting interest rates, said Gensler, who is set to step down Monday.
Gensler’s exit from the SEC will cap what has been a frenetic four years at the agency that has often left Wall Street lobbyists, crypto executives and Republicans fuming.
The hard-charging regulator — a one-time Goldman Sachs partner who previously worked at Treasury and led the Commodity Futures Trading Commission — joined the SEC as chair in the spring of 2021. It was a moment of intense scrutiny on the agency as the markets faced a string of then-bewildering phenomena like crypto, so-called meme stocks and blank-check companies with celebrity sponsors that were taking companies public.
He has since pursued arguably one of the most ambitious agendas in the SEC’s 90-year history, including reforms to level the playing field around the trading of U.S. stocks, bolster the Treasury market and give investors new information around companies’ climate-related risks. But Gensler’s rules were occasionally met with legal challenges — some of which have already prevailed. The SEC’s push to shed new light on the vast private funds market, for instance, was notably knocked back.
In the interview, Gensler said the SEC has been successful in its enforcement efforts and that the vast majority of its rules have gone unchallenged. But he did express concern about how far the courts have pivoted in their interpretations of the law as well. As for Gensler’s plans in a post-SEC life? He’s staying mum about what’s next. But Gensler did say that he’s unlikely to return to government after nearly 30 years in and around it. Not that he’s knocking the work.
“It’s not easy walking into the public square and debating public policy and trying to form coalitions and consensus,” he said. “It’s messy. It’s hard. But it’s just very consequential.” For the full Q&A, check out POLITICO Pro. It’s FRIDAY — T-minus three days until Inauguration Day. Are you joining a financial regulator in the Trump admin? Give us a shout. And go Irish. Declan can be found at dharty@politico.com, and, as always, you can reach Sam at ssutton@politico.com.
| | A message from U.S. Bank: At U.S. Bank, we’re committed to helping small businesses grow. The Spicy Olive, a thriving Ohio-based gourmet foods shop, is one of over 1.1 million small businesses we are proud to serve. Since 2012, Melanie Cedargren has been able to expand her business from one shop to three. U.S. Bank has been by her side every step of the way. Learn more about U.S. Bank’s support for small business. | | | | | Bessent’s day on Capitol Hill — President-elect Donald Trump’s pick for Treasury secretary, Scott Bessent, still appears headed for a smooth confirmation after getting grilled by lawmakers Thursday on the Federal Reserve, the debt limit and more, our Michael Stratford reports. The hedge fund manager told lawmakers on the Senate Finance Committee that “the single most important economic issue of the day” is extending expiring tax cuts that were enacted during the first Trump administration, per Michael. Otherwise, the country would face “an economic calamity,” Bessent said.
— Bessent declared the U.S. would not default under his watch, that he would support dialing up sanctions on Russian oil and laid out how to expect Trump to pursue tariffs. He also said he believes the Fed should act independently when setting interest rates. HUD pick’s “carrots-over-sticks approach” — Meanwhile, at the Senate Banking Committee, Scott Turner, a former NFL player and housing developer who has been tapped to lead the Housing and Urban Development Department, told lawmakers that he would encourage local governments to look at their zoning laws — but “stopped short of offering details on how to get them to follow through,” our Katy O’Donnell reports. “We can encourage them to look at those zoning laws,” Turner said, per Katy. “We encourage that, but I don’t believe that we need to force or mandate it.” — In other housing news, Trump has tapped private equity executive Bill Pulte to run the Federal Housing Finance Agency, Katy reports. His selection comes ahead of an expected push by the incoming administration to release Fannie Mae and Freddie Mac from government control in what Katy reports is “a complex maneuver that could have major repercussions for the mortgage market.” ICYMI: China sending envoy to inauguration — Our Victoria Guida and Phelim Kine reported last night that China’s Vice President Han Zheng is slated to attend Trump’s inauguration Monday. Rest in peace — Elise Bean, a longtime aide to former Sen. Carl Levin (D-Mich.) who led numerous investigations into corruption, money laundering and fraud, died on Jan. 14. After her career on the Hill, Bean worked as the director of the Carl Levin Center for Oversight and Democracy. Elise “devoted her prodigious talent and energy to helping others to understand how and why to undertake bipartisan, fact-based oversight,” the center said in a statement announcing her passing. “She always had time to offer guidance and to hear another point of view. She was the hardest working person any of us has ever met.”
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| | | A message from U.S. Bank:   | | | | | First in MM: BPI’s scathing report on the CFPB — The Bank Policy Institute is out this morning with an 18-page report dissecting CFPB Director Rohit Chopra’s recent moves. “Under the current leadership, the Bureau has consistently exceeded its statutory remit and maneuvered to evade judicial or congressional scrutiny,” the report states. “Time and again, it has issued a rule or guidance that is unsupported by the statute it purports to implement or interpret. And time and again, it has sought to insulate its actions from review and even comment by adopting rules in the guise of guidelines, circulars, advisory opinions and enforcement actions.” AmEx hit over deceptive marketing — From Michael: “American Express has agreed to pay a combined $230 million to resolve criminal and civil allegations that it deceptively marketed credit cards and wire products for small business customers.”
| | Crypto super PACs’ first post-election move — The crypto super PAC group that shook up 2024 with more than $130 million in spending on congressional races is going up in the coming days with its first ad since the November elections, our Jasper Goodman reports. Its target: A Trump-backed candidate in Florida running to replace GOP Rep. Mike Waltz, the president-elect’s pick for national security adviser. One of the group’s three super PACs, Defend American Jobs, is going on the air with a $500,000 ad buy supporting Randy Fine, a current state senator. The crypto PAC group is poised to remain a major player entering the 2026 elections, with more than $100 million in the bank. “We are keeping our foot on the gas,” said spokesperson Josh Vlasto. Here comes the crypto EO — Bloomberg reports that Trump is planning an executive order, possibly for Monday, that would designate crypto a national priority and set up a crypto advisory council. The order could also include a directive to “pause any litigation involving crypto,” Bloomberg reports. Here come the institutions — One of the biggest question marks surrounding crypto has long been where are the institutional investors. Well, they’ve seemingly arrived. The Financial Times reports that pension funds, which are usually conservative in their investments, “are dipping their toes into buying bitcoin, in a sign that even typically staid corners of finance are finding it hard to ignore the potential outsized returns from cryptocurrencies.”
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| Tick tock on TikTok — From our Anthony Adragna and Christine Mui: “As a historic TikTok ban looms, lawmakers are hunting for ways to save the app — sending Congress, the White House and possibly federal enforcers into unknown territory.” Credit Union bill re-up — Reps. Vicente Gonzalez (D-Texas) and Brian Fitzpatrick (R-Pa.) have reintroduced legislation alongside Sen. Mazie Hirono (D-Hawaii) and Dan Sullivan (R-Alaska) that would exclude veteran-owned small businesses from lending caps that are applied to credit union member business loans. In a statement, Gonzalez said the Veterans Member Business Loan Act would level “the financial playing field” and empower veterans “to achieve their American dream by investing into themselves and into their communities.”
| | Longtime Treasury staffer Natalia Berdibekov-Li has joined Mike Novogratz’s digital assets company Galaxy Digital as its new head of U.S. policy. She was most recently the director of Treasury’s Office of Consumer Policy. Nels Nordquist, who as a staffer on the House Financial Services Committee worked on national security issues, is expected to join the Trump National Security Council as a senior director for international economics, Robbie Gramer and Daniel Lippman report. Norquist declined to comment, as did a spokesperson for the Trump transition team.
| | A message from U.S. Bank: At U.S. Bank, we recognize and celebrate small business owners for their vital contributions to our communities and economy.
That’s why we’re proud to support small business owners like Melanie Cedargren, founder of The Spicy Olive, a thriving Ohio-based gourmet foods shop. With our help, Melanie was able to expand her business from one shop to three.
U.S. Bank is committed to fueling growth for small businesses like The Spicy Olive. With a 74% rise in SBA lending this year, we are helping more small businesses continue to thrive and contribute to local economies. We serve over 1.1 million small businesses nationwide, providing financial guidance and resources to help them succeed. Because U.S. Bank is small enough to care, and big enough to make a difference.
Learn more about U.S. Bank’s support for small business. | | | | |
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