As we predicted last year, SEC Chair Gary Gensler is in the hot seat before the House GOP to defend his agency’s agenda. During a contentious congressional hearing on Tuesday before the House Financial Services Committee, which largely focused on cryptocurrencies and climate change disclosure rules, Republicans accused Gensler of overreaching and not being transparent. The hearing lasted more than four hours and was the first appearance for Chair Gensler since House leadership switched to Republicans.
Throughout the hearing, Republicans expressed frustration that Chair Gensler wouldn’t give them straight answers. They added that Gensler has failed to adhere to congressional inquiries. Prior to Tuesday’s hearing Committee Republicans sent five letters to Chair Gensler requesting information regarding proposals promulgated by the Commission, including regarding the Commission’s legal authority to pursue its “radical” regulatory agenda, following the Supreme Court’s decision in West Virginia v. EPA.
This week’s hearing is just the beginning of what will be a long two years for Chair Gensler and SEC staff. Representative Patrick McHenry (R-NC), chair of the House Financial Services Committee (a key panel charged with overseeing the SEC) and committee Republicans have vowed to crack down on Gensler’s fast-moving rulemaking agenda and enforcement priorities. They say Gensler is doing too much too fast and has gone beyond the Commission’s mandate and statutory authority on certain rule proposals, chief among them the climate risk disclosure rules proposed in March 2022.
It is worth nothing that while Republicans have the House majority, they don’t have the ability to directly block Chair Gensler’s agenda, with Democratic control of the Senate and a Democratic White House. This essentially means the Financial Services Committee will lean heavily on its ability to call hearings and launch investigations in order to check Gensler, instead of directly advancing legislation to constrain the agency.
