Insights into an SEC composed of Trump appointees can be gleaned from Financial Services Committee Chairman Jeb Hensarling’s (R-TX) opening statements at a committee hearing on SEC oversight, with testimony by outgoing SEC Chair Mary Jo White. Congressman Hensarling noted some concerns and disagreements with the SEC, possibly foreshadowing policies of the incoming Trump administration:
- The SEC’s ongoing failure to develop a capital formation agenda. Notwithstanding two very minor rule changes approved last month, the SEC has done little to promote capital formation since Congress passed the JOBS Act in 2012. The failure by the SEC stems in part from the Commission’s refusal to act on recommendations made by its Small Business Capital Formation Forum.
- The SEC has not implemented the directive passed by Congress requiring the SEC to simplify its disclosure regime. The FAST Act, which became law nearly a year ago, requires the SEC to eliminate or reduce burdensome, duplicative or outdated disclosures. The SEC has an obligation to follow the law and not appease extremists whose ideological objectives that have nothing to do with the SEC’s core mission
- The SEC’s failure to require the electronic delivery of mutual fund documents is disappointing.
- Given the disturbing national debt clock, Congressman Hensarling sees no need for the SEC to receive a pre-funded escrow account of more than $290 million for a potential move of its headquarters. The SEC will have to increase its fees to pre-fund the move, which is nothing less than a tax on capital formation.
- Claims that the SEC is underfunded are not supported by the facts since the SEC’s budget has increased by a whopping 325 percent since the year 2000—an increase the American people do not enjoy. Moreover, the SEC’s current budget of $1.605 billion does not account for money in its Reserve Fund, which can include up to $100 million – plus another $25 million in unused funds that carry over from a previous fiscal year.
- Whenever there is a transfer of power from one presidential administration to another, there is a temptation for federal agencies to rush pending rulemakings to completion, as a way of cementing the policy priorities of the outgoing administration. But this type of “midnight rulemaking” is neither conducive to sound policy nor consistent with principles of democratic accountability.
- As there are currently two vacancies at the Commission, absent an emergency and given Chair White’s current reputation and legacy, the SEC should respect the results of last week’s election and resist the temptation to finalize any regulations, including Dodd-Frank Title VII regulations, in deference to the right of the incoming administration to set its own priorities upon taking office in January.
Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, set forth her political agenda, and denounced President-elect Trump’s stances on financial services and Congressional Republicans’ deregulatory Wall Street agenda. Congresswoman Waters noted:
- We are facing uncertain times, and at the forefront of that uncertainty is a President-elect who does not have a coherent or consistent stance on anything. We don’t know if he’s building a wall or just a fence. We don’t know if he’s repealing Obamacare or cherry picking some provisions that he now seems to support. We don’t know who he is, what he stands for, or what kind of president he will be. We cannot rely on anything he says because it changes from one day to the next.
- So when Mr. Trump talks about financial services reform and dismantling Dodd-Frank, what does he mean? Does he mean letting the Wall Street banks he’s so indebted to write their own rules? Does it mean repealing the fair housing laws the Department of Justice sued him over decades ago? Does he want to repeal investor protections and make it harder for the SEC to go after bad actors? Does he want to gut the Consumer Financial Protect Bureau, despite the agency being the strongest champion of every day consumers?