Washington, D.C. – Today, Majority Whip Tom Emmer (MN-06) questioned Securities and Exchange Commission (SEC) Chair Gary Gensler regarding the SEC’s regulation-by-harassment at the expense of innovation, competition and everyday Americans.
Watch: Whip Emmer questions Chair Gensler
A transcript of Whip Emmer’s questioning can be found below.
Emmer: Thank you, Mr. Chair. Chair Gensler, I have a series of questions that require a “Yes” or “No” answer. In the interest of my limited time, I would appreciate it if you would comply with that.
Mr. Gensler, is it fair to say generally that large institutions in any given industry benefit more from regulatory uncertainty than everyday market participants or smaller institutions who don’t have the scale or the capital to fund expensive compliance teams?
Gensler: Large institutions could benefit from uncertainty…
Emmer: Reclaiming my time, the answer is yes, sir. Mr. Gensler, you had an 18-year career at Goldman Sachs where you were Partner and Co-Head of Finance, correct?
Gensler: Yes, sir.
Emmer: Thank you. And is it correct to say that you made most of your personal wealth directly through your employment at this bank, Goldman Sachs?
Gensler: I’ve done well since then too, sir.
Emmer: I will take that as a yes as well. You describe the SEC under your leadership as the “cop on the beat watching out for [our] constituents,” correct?
Gensler: I think that is a mandate that Congress has given us.
Emmer: Again, I think you’ve said that. Reclaiming my time. The answer is yes, sir. If you could just comply with what I’ve asked I would appreciate it.
But given your 18-year career at one of the biggest banks in the world and the personal financial fortune you amassed there, do you think it’s possible for you to serve as an impartial regulator and not favor large financial intermediaries?
Gensler: Absolutely, sir.
Emmer: Well, Mr. Gensler, do you believe the vast majority of digital assets meet the investment contract test and are therefore securities operating illegally outside of the U.S. regulatory umbrella?
Gensler: As I’ve said many of these assets are basically the public is anticipating profits based on the efforts of others…
Emmer: Sir, is that a yes? Is the answer then yes?
Gensler: Again, without prejudging any one, I do think the significant majority…
Emmer: Reclaiming my time, I will take that as a yes.
And to be clear sir, this perspective has nothing to do with a concern you noted in a speech last year where you said, quote, “Over the past year, several bank executives have shared their concerns with me about the sheer number of depositors who have moved money from their bank accounts into crypto-related exchanges and wallets,” end quote, right?
Gensler: The concern that those bank executives raised was that…
Emmer: Again, I am reclaiming my time, sir. No. I have asked you to answer the questions as short as you can so I can use the time that I have, and it’s clear that you would like to avoid answering the questions, in my opinion.
An Obama appointed judge in the Southern District of New York, a bank friendly jurisdiction where you bring most of your cases, recently found that decentralized financial technology, quote, “not only removes the so-called middlemen from these transactions, but it also allows users to interact […] through a variety of methods in an easy and efficient manner.” End quote.
The court also said “underwriters,” like the ones at banks where you worked sir, are, quote, “precisely the types of individual roles that decentralized exchanges were designed to eliminate,” end quote. Mr. Gensler, can you assure this Committee that your style of regulation by harassment toward digital asset innovation is to the benefit of every American and not driven by your desires to protect industry incumbents?
Gensler: This is a field that is rife with fraud and manipulation, and I am looking out for the American investors who have been hurt…
Emmer: I will reclaim my time. Mr. Gensler, despite your years of rhetoric, like today, I’m convinced you are not an impartial regulator. Instead, it’s clear that you are working to consolidate your own power even though it means crushing opportunities for everyday Americans and frankly the financial future of this country. Even the federal courts are highlighting the damage, you sir, are doing to our constituents and they’re telling you that you don’t have the legal authority to accomplish your goal of squashing competition in the financial markets. Congress has been telling you that too.
Now Mr. Gensler, I believe our great financial system is the definition of freedom in this country and congressional policies must provide room for the traditional financial system to evolve alongside the disruptive digital asset ecosystem. That said, it cannot be understated that a common theme throughout your career sir is your relentless loyalty to the largest financial institutions at the clear expense of innovation, competition, and everyday Americans.
I yield back.