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Biden to Name Former CFTC Head Gary Gensler to Head the SEC: Reports

January 13, 2021

President-elect Joe Biden is poised to name Gary Gensler, the former chair of the Commodity Futures Trading Commission, as SEC chairman, according to multiple news reports.

Sources familiar with the decision have confirmed the plans to Reuters, Bloomberg and the Wall Street Journal.

Gensler’s appointment is likely to be of concern on Wall Street as he became known as a tough operator in his role devising new rules on swap trading at the CFTC as mandated by Congress following the 2007-2009 financial crisis, writes Reuters, which first broke the story.

Gensler — a former Goldman Sachs banker and a professor at MIT Sloan School of Management — chaired the CFTC from 2009 to 2014, and while there also led the prosecution of investment banks over the Libor rigging scandal, according to the newswire.

After stepping down from his role at the CFTC, he was chief financial officer for Hillary Clinton’s presidential campaign in 2016, according to Bloomberg. He had worked earlier with the Clintons: after earning millions of dollars at Goldman, he joined then-President Bill Clinton’s administration in 1997, working at the Treasury Department under Secretary Lawrence Summers, the news service writes.

Since November 2020, meanwhile, Gensler has been heading Biden’s transition team tasked with oversight of the financial industry, Reuters writes.

Neither Gensler nor a spokesperson for Biden responded to Reuters’ and Bloomberg’s requests for comment.

Gensler’s appointment would be seen as particularly tough on the industry compared to the reign of current SEC chairman Jay Clayton, appointed by President Donald Trump, Reuters writes.

Under Clayton — a former Wall Street lawyer — the commission overhauled dozens of rules, according to the newswire. Many of those changes have drawn extensive criticism that the SEC was pushing a deregulatory agenda that could harm retail investors, such as in regard to Regulation Best Interest and the expansion of the “accredited investor” definition.

Clayton stepped down from his role on December 23 and Trump appointed SEC commissioner Elan Roisman as acting chair, as reported.

Democratic lawmakers are likely to expect Gensler to undo some of the SEC’s moves under Clayton, including making Reg BI more stringent, according to Bloomberg.

“The top of the agency is going to be setting an agenda in the opposite direction of where Jay Clayton and the congressional Republicans have been steering for years, by expanding and improving industry disclosures and restoring investor rights,” says Ty Gellasch, head of Washington-based investor advocacy group Healthy Markets, according to Reuters.

The prospect of Gensler at the head of the SEC was met with enthusiasm by the head of the Consumer Federation of America.

“Gary Gensler was incredibly effective at CFTC. If true, this would be a good choice for investors,” Barbara Roper, the CFA’s director of investor protection, tweeted on Tuesday.

The idea of Gensler leading the SEC was also welcomed from another corner of the financial service industry: advocates of cryptocurrencies.

“Gary Gensler as SEC Chairman is positive for #Bitcoin,” tweeted Anthony Scaramucci, linking to what he called “a crypto-enlightened op-ed” Gensler wrote in 2019.

Scaramucci — a Goldman Sachs investment banking alum who gained fame as President Donald Trump’s communications director for a mere 10 days in July 2017 — is also the founder of hedge fund SkyBridge, which earlier this month launched a bitcoin-focused fund.

Do you have a news tip you’d like to share with FA-IQ? Email us at editorial@financialadvisoriq.com.

By Alex Padalka
  • To read the Bloomberg article cited in this story, click here if you have a paid subscription.
  • To read the Reuters article cited in this story, click here.
  • To read the Wall Street Journal article cited in this story, click here if you have a paid subscription.
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Tags:  Staffing and recruiting , Regulatory/legal issues , Goldman Sachs , Commodity Futures Trading Commission

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