One Day Before the Senate Vote on Gary Gensler to Chair the SEC, Senator Toomey, Funded by Wall Street, Berates Him

By Pam Martens and Russ Martens: April 14, 2021 ~

Gary Gensler

Gary Gensler

Today is the 85th Day of the Joe Biden Presidency and his nominee to Chair the Securities and Exchange Commission, Gary Gensler, has yet to be confirmed by the full Senate. Apparently, the moneyed interests that control the corporate wing of the Republican party have put Senator Pat Toomey in charge of attempting to derail the nomination.

A full Senate vote will take place on Gensler at 11:45 a.m. today, but that vote will be limited to Gensler serving out the balance of the term of Trump’s former SEC Chair Jay Clayton, which expires in – wait for it – 52 days. The Senate Banking Committee had cleared Gensler to not only fill Clayton’s remaining term but had also cleared his reappointment for a five-year term ending on June 5, 2026. That five-year term will not be voted on by the Senate today according to yesterday’s Senate proceedings, likely because Toomey and his ilk are hoping Republicans will take back the Senate in 2022 and return to their Trump-era deregulatory agenda on Wall Street.

Under current rules, Gensler would be able to serve in his post for an additional 18 months after this term expires if Biden does not nominate a successor.

During his long-winded remarks against the Gensler nomination on the Senate floor yesterday, Toomey showed his dismissal of calls to rein in the gamification of markets by trading platforms like Robinhood that use various behavioral prompts to encourage more active trading among novice investors. Until recently, Robinhood’s trading app had showered  confetti after a trade was made. After criticism in Senate and House hearings, Robinhood announced it would scrap the confetti.

The seductive nature of Robinhood’s app was part of recent Congressional hearings on the wild trading in shares of GameStop and other meme stocks, which revealed a deeply conflicted, payment-for-order-flow trading structure benefiting billionaire hedge fund titans on Wall Street. (See here, here, and here.)

Toomey had this to say yesterday on the Senate floor:

“There is another issue that is concerning to me, and that is Mr. Gensler’s answers to questions during his nomination hearing about recent stock market volatility. We have seen some extraordinary volatility in a handful of companies for a variety of relatively novel reasons.

“Some have suggested that we have to take a paternalistic approach to grown adults and maybe limit their ability to make investments because they don’t know well enough what is good for them. And maybe there are apps that make it too user friendly to buy stocks, so maybe that leads to imprudent decisions.

“I find it shocking that we would actually contemplate limiting grown adults’ ability to make their own decisions. I wasn’t sure where Mr. Gensler came out on this, and in some respects, I think, he indicated that there may be some sympathy to this paternalistic view that I think would be a very, very big mistake.”

It should be noted that for most of its 87-year history, the Securities and Exchange Commission has made protecting the retail investor from the sharks on Wall Street a top priority. This is a realistic view given Wall Street’s rap sheets, not a paternalistic view.

You can read Toomey’s full, anti-regulatory remarks beginning on page S1886 of the Congressional Record here.

According to the Center for Responsive Politics, over the course of his political career, Toomey’s largest donor to either his Campaign Committee and/or Leadership PAC has been the Club for Growth, which has provided more than $1.26 million to Toomey’s coffers. That’s more than 7 times the amount of Toomey’s second and third largest donors, the hedge fund Elliott Management and the giant Wall Street investment bank, Goldman Sachs.

The Club for Growth is a dark money group that has pushed for the privatization of Social Security; the destruction of workers’ rights and unions; and the deregulation of dangerous industries. Toomey served as the President of Club for Growth from 2005 to 2009.

Another group that has helped Toomey’s political career is Freedom Partners Action Fund. It funneled at least $4.3 million into running attack ads against Toomey’s Democratic challenger, Katie McGinty, in the 2016 senate race in Pennsylvania.

Charles Koch, the billionaire Chairman and CEO of the fossils fuels conglomerate, Koch Industries, and his trust, gave $14 million to the Freedom Partners Action Fund Super Pac from 2014 through July 2018 according to the Center for Responsive Politics. Freedom Partners played an outsized role in staffing up the Trump administration. (See How Did Koch Industries’ Law Firm Grab Control at the White House?)

Immediately following Toomey’s long-winded tirade against the Gensler nomination yesterday, Senator Sherrod Brown, Chair of the Senate Banking Committee that had advanced Gensler’s nomination, rose to make the following remarks:

“I urge my colleagues to support President Biden’s nominee to be Chair of the Securities and Exchange Commission, Gary Gensler.

“In March, Gary Gensler appeared before the Banking and Housing Committee for his nomination hearing and the Committee advanced him to the full Senate on a bipartisan vote.

“Mr. Gensler is an experienced public servant with a strong record of holding Wall Street accountable. And he will lead the SEC at a time when it’s become more and more obvious to most people that the stock market is detached from the reality of working families’ lives.

“Mr. Gensler will bring the SEC’s focus back to the people who make this country work, and push to ensure that markets are a way for families to save and invest for their kids’ education, for a down payment on a home, and for a secure retirement – not a game for hedge fund managers, where workers always lose.

“As Chair of the Commodity Futures Trading Commission, Mr. Gensler led the implementation of important safeguards under the Dodd-Frank Wall Street Reform and Consumer Protection Act, to bring transparency and stability to more markets.

“He was also tough on enforcement issues, cracking down on the big banks that had manipulated interest rates for years.

“Mr. Gensler’s is an expert on finance and markets, who previously served as Secretary of the Treasury for Domestic Finance and Assistant Secretary of the Treasury for Financial Markets.

“He will carry out the SEC’s mission, to ensure U.S. capital markets deliver growth and investment opportunities that grow the real economy and give middle class families the opportunity to build wealth.

“He understands that we need to ensure confidence and stability in our markets, as the foundation to grow American businesses and support the workers that make their companies successful.

“Mr. Gensler will listen to families saving for the future, as well as the professionals who manage workers’ pensions and retirements. And, he will make sure that savers—large and small—can hold corporate executives accountable.

“When it comes to enforcement, Mr. Gensler has shown he will take on bad actors – no matter how big and powerful they are – and hold them accountable.

“This pandemic has reminded people just how rigged the Wall Street system can be. If you only look at the stock market, it looks like the pandemic never happened.  The market reached new highs last fall, while families and businesses continued to suffer. Workers put their health and their lives on the line to keep businesses running – and once again, hedge funds and insiders reaped the vast majority of the profits.

“It doesn’t have to be that way. We can have a market that works for everyone — I know Mr. Gensler shares that goal.

“Under his leadership, the SEC can protect people’s hard-earned savings, keep our markets stable, and make them fairer. That will let us create an economy where everyone can participate.

“I urge my colleagues for vote yes for Mr. Gensler’s nomination.”

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