Republican lawmakers are increasingly critical of SEC Chairman Gary Gensler over what they see as an overreach of regulatory authority in certain financial industries. Rep. Ritchie Torres of New York, a supporter of the cryptocurrency industry, has been vocal in his critique of Gensler’s attempts to implement more rules for investment, particularly in the wake of the collapse of cryptocurrency exchange FTX.
In a September House Financial Services Committee hearing, Torres grilled Gensler over “investment contracts,” asserting that they are crucial in determining the SEC’s authority over cryptocurrency. Similarly, Rep. Steven Horsford of Nevada has raised concerns about how Gensler’s rulemaking could negatively impact small businesses.
Other Democrats, like Rep. Wiley Nickel of North Carolina, have also expressed the need for Congress to have more oversight over regulators’ decisions, such as those coming from Gensler and the SEC. They argue that regulations need to account for the changing dynamics of the economy and have real consequences on minority communities.
The proposed changes the SEC’s Custody Rule have also drawn scrutiny from Biden administration officials, such as Michael Hsu, the acting comptroller of the currency, and Michael Barr, the vice chair for supervision of the Board of Governors of the Federal Reserve System. They have expressed concern over how these changes could impact banks’ balance sheets.
In response to Gensler’s regulatory actions, a pair of House Republicans introduced a bill earlier this year to remove him from his post, citing a “long series of abuses that have been permitted under the current SEC structure.” The proposed SEC Stabilization Act seeks to restructure the SEC to redistribute power from the chair to other commissioners, add a sixth commissioner to the body, and create an executive director position to oversee day-to-day operations.
Gensler’s office has not yet commented on the criticism from Republican lawmakers.