Senate Should Question Biden SEC, CFPB Nominees About Needed Constraints on Regulators

Today, the Senate Banking Committee is considering President Biden’s nomination of both Gary Gensler to head the SEC and Rohit Chopra to head the CFPB. CEI experts urged committee members to question the nominees about their approach to regulating investment products and regulatory barriers related to middle class investors, regulatory safe harbors for new products and services, and policies that penalize politically disfavored industries.

Statement by John Berlau, CEI Senior Fellow:

“Senators should grill both nominees on whether they will ensure consumers and investors can make informed choices free of fraud but, otherwise, respect Americans’ choices to take on levels of risk in pursuing financial products and technologies.

 “Senators should ask Mr. Gensler if he will uphold SEC rules under the bipartisan Jumpstart Our Business Startup (JOBS) Act – signed by President Obama in 2012 – to liberalize equity crowdfunding so that ordinary investors can back ventures by small entrepreneurs. They should also encourage him to not roll back recent liberalizations of the ‘accredited investor’ rule to allow knowledgeable, non-wealthy investors to invest in early-stage private companies and to look at liberalizing the rule further to promote more equality of opportunity among investors.

“Senators should encourage Mr. Chopra to preserve the CFPB’s recent implementation of the ‘sandbox’ – a concept in practice in many other countries – that allows safe harbor for new products and services of innovative firms if the CFPB sends an initial letter stating a firm is complying with current rules.”

Statement by Richard Morrison, CEI Research Fellow:

“Gensler says he will work to promote transparency and accountability in our capital markets, but missing is an emphasis on urgently needed regulatory reforms at the Securities and Exchange Commission itself. Some SEC proposals concerning environmental, social, and governance (ESG) goals could choke off capital flows to industries that are legal yet politically disfavored – contrary to the SEC’s mission of protecting investors and facilitating capital formation.” > View the full analysis