Biden poised to pick Wall Street critic Gary Gensler to lead US Securities and Exchange Commission

Democratic lawmakers would expect Gary Gensler to undo actions put in place during the Trump administration.
Democratic lawmakers would expect Gary Gensler to undo actions put in place during the Trump administration.PHOTO: REUTERS

NEW YORK (BLOOMBERG) - Gary Gensler is US President-elect Joe Biden's likely pick to lead the Securities and Exchange Commission, according to two people familiar with the matter, a move that would put a former regulator who is known for sparring with financial executives atop Wall Street's main overseer.

Gensler, 63, ran the Commodity Futures Trading Commission during the Obama administration, a post where he was the driving force behind the government's new oversight regime of the massive over-the-counter swaps market. The role put him in frequent combat with banks, which resisted his push to bring transparency and guardrails to a corner of finance that helped ignite the 2008 credit crunch.

If nominated by Biden to be SEC chairman and confirmed by the Senate, Gensler would likely find himself in familiar territory battling lobbyists over contentious policy decisions. The SEC is the front-line regulator of the securities industry and arbiter of what public companies must disclose to their shareholders.

Democratic lawmakers would expect Gensler to undo actions put in place during the Trump administration, including reversing rollbacks of post-crisis rules and toughening a recently approved standard for stock-broker conduct that progressives blasted as too weak. The SEC under Biden will also face intense pressure to make corporations boost disclosures of political contributions and how climate change affects their bottom lines.

Leading candidate

While Gensler is seen as the leading SEC candidate, a final decision hasn't been made, said one person, who asked not to be named before a public announcement. A spokesperson for Biden's transition declined to comment on Gensler's potential selection, which was reported earlier by Reuters. Gensler also declined to comment.

Gensler runs the team that is reviewing the SEC, Federal Reserve and other financial regulators for Biden's transition. After stepping down as CFTC chairman six years ago, he worked as the chief financial officer for Hillary Clinton's 2016 presidential campaign. Gensler is currently a professor at MIT's Sloan School of Management where he teaches classes on financial technology and cryptocurrencies.

At the CFTC, Gensler helped author the 2010 Dodd-Frank Act and pushed through many of the law's new rules. His aggressive agenda made him the financial industry's No. 1 adversary in Washington - a label he relished. It was an extraordinary turn for the former Goldman Sachs Group partner, who many Democrats feared would be too deferential to Wall Street when President Barack Obama selected him for the CFTC in 2008.

Gensler's ability to twist arms and pierce through the bureaucracy to get things done also arguably had a downside. His relations with other Obama regulators were at times rocky, and his tough negotiating tactics on policy bruised egos and wore down his colleagues. The CFTC staff felt so taxed by the long hours and heavy workload Gensler demanded that they began an ultimately successful effort to unionise.

Goldman millions

Earlier in his career, Gensler earned millions of dollars at Goldman. He left the firm in 1997 to join the Clinton administration, where he worked at the Treasury Department under Secretary Lawrence Summers. While that resume once made liberal Democrats nervous, his time at the CFTC largely won them over. Progressives support his SEC candidacy, as do consumer groups and investor advocates.

Gensler's prospects of winning confirmation were helped significantly by Democrats winning two Senate run-off elections in Georgia this month, resulting in a 50-50 split. The incoming vice-president, Kamala Harris, holds the tie-breaking vote should all Republicans oppose Gensler. That could nullify any efforts by the powerful banking lobby to block him.