Why Rep. Tom Emmer thinks SEC Chair can’t be trusted — the inside story

In this post:

  • Majority Whip Tom Emmer questioned SEC Chair Gary Gensler’s ability to regulate impartially, citing Gensler’s 18-year career at Goldman Sachs and his loyalty to large financial institutions.
  • Emmer, a known crypto advocate, criticized Gensler for potentially stifling innovation and competition, especially in the crypto space, at the expense of everyday Americans.
  • The hearing also featured Rep. Patrick McHenry, who accused Gensler of choking off the digital asset ecosystem and lacking transparency with Congress, adding to the growing tension between the SEC and lawmakers advocating for a balanced regulatory framework.

In Tuesday’s House Financial Services Committee hearing, Majority Whip Tom Emmer (MN-06) took Securities and Exchange Commission (SEC) Chair Gary Gensler to task over his regulatory approach. In the 4-minute questioning, Emmer doubted Gensler’s impartiality, citing the SEC Chair’s extensive background in finance, including an 18-year career at Goldman Sachs. During the hearing, Emmer insisted on “Yes” or “No” answers to his questions, aiming to get to the heart of the matter within his limited time.

Emmer began by asking Gensler if large institutions generally benefit more from regulatory uncertainty than smaller market participants. Gensler conceded that large institutions could indeed benefit from such uncertainty. Moreover, Emmer pointed out that Gensler had amassed most of his wealth through his employment at Goldman Sachs. When asked if this background could affect his ability to serve as an impartial regulator, Gensler responded with an unequivocal “Absolutely, sir.”

Emmer criticized Gensler’s loyalty to financial institutions

Additionally, Emmer criticized Gensler’s loyalty to large financial institutions, suggesting that it comes at the expense of innovation, competition, and everyday Americans.

Emmer cited a quote from Gensler, in which the SEC Chair noted that several bank executives had expressed concerns about the increasing number of depositors moving money into crypto-related exchanges and wallets. Emmer questioned whether this perspective influenced Gensler’s regulatory stance, especially given his financial ties to the banking industry. In response to the question, Gensler attempted to provide a contextual answer but was interrupted.

Emmer also said this to Gensler during the questioning: “…Mr. Gensler, despite your years of rhetoric, like today, I’m convinced you are not an impartial regulator. Instead, it’s clear that you are working to consolidate your own power even though it means crushing opportunities for everyday Americans and frankly the financial future of this country. Even the federal courts are highlighting the damage, you sir, are doing to our constituents and they’re telling you that you don’t have the legal authority to accomplish your goal of squashing competition in the financial markets.”

Emmer’s scrutiny of Gensler is noteworthy, particularly because the Congressman has positioned himself as a crypto advocate. He has been pushing for regulatory clarity in the United States, especially following the SEC’s crackdown on crypto firms that began in 2022. Significantly, Emmer’s top financial contributors include venture capital firm Andreessen Horowitz.

However, Emmer wasn’t the only one to challenge Gensler during the hearing. Rep. Patrick McHenry suggested that the SEC could be subpoenaed over documents related to former FTX CEO Sam Bankman-Fried. McHenry accused Gensler of attempting to “choke off the digital asset ecosystem” and of refusing to be transparent with Congress regarding connections between the SEC, FTX, and Bankman-Fried.

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