The chairman of the US Securities and Exchange Commission has called for strengthening the “guardrails of finance” following the collapse of a Silicon Valley bank, as he pushes to implement new rules in the face of industry pushback.
Gary Gensler said Wednesday that SVB’s dramatic explosion last week “is a reminder of the importance of these resilience projects to everyday Americans.”
“Unfortunately, history tells us that events like this past week will happen from time to time,” he added ahead of an SEC vote on new proposals, including cybersecurity risk management. “Thus, we must do our best to make them less frequent, strengthen financial infrastructure when they do occur, and protect the American public.”
Since his appointment as SEC chairman two years ago, Gensler has proposed sweeping new rules in areas including Treasury securities, private equity and climate risk disclosure in an effort to protect investors and improve market efficiency.
The scale and breadth of Gensler’s proposed measures have generated strong pushback from Wall Street, which argues that the rules could have unintended consequences and that it has often been given too little time to respond to the proposals. The SEC has extended the public comment period for some measures.
Some lawmakers have raised concerns about Gensler’s policy agenda, arguing that he is reaching beyond his agency’s mandate. Republicans have pointed in particular to the SEC’s proposed climate rule, which would force public companies to disclose their direct greenhouse gas emissions.
However, Gensler has argued that he is only enforcing US securities laws and wants to increase the transparency and competitiveness of financial markets for the benefit of investors.
Their regulatory push comes in the wake of the 2022 Supreme Court West Virginia v Environmental Protection Agency The decision, which found that the EPA is not specifically authorized by Congress to regulate carbon emissions, casts doubt on the rulemaking powers of US regulators more broadly. The SEC is now facing a case in the High Court challenging its internal enforcement procedures.
On Wednesday, Democratic Senators Elizabeth Warren of Massachusetts and Richard Blumenthal of Connecticut wrote to the SEC and Justice Department calling for a “comprehensive investigation” of senior SVB executives and US officials “involved in the collapse.”
The DoJ has opened an investigation into SVB’s collapse, and the SEC is also investigating the bank’s collapse, according to media reports. Gensler said Sunday that “without speaking to any individual entity or individual, we will investigate and take enforcement action if we find violations of federal securities laws”.
The scrutiny comes amid a broader reckoning at the Federal Reserve of how it oversees SVB but also its rules governing banks more broadly.
US regulators have come under fire since SVB’s implosion, which prompted authorities to intervene over the weekend to avert a more pronounced banking crisis. The Fed on Sunday announced the creation of credit facilities for banks to fully meet the needs of their depositors.
As part of its review, the Fed is considering how to strengthen capital and liquidity requirements for banks between $100bn and $250bn in assets – a subset of banks including SVB were eased, according to a person familiar with the matter. Regulatory oversight during the Trump administration.
Among other rules, the stress tests the Fed imposes on lenders to test their capacity for adverse shocks could also be tightened, the person said.
The review announced by the Fed on Monday will be published by May 1.
Dennis Kelleher, co-founder of Better Markets, an investor non-profit, said, “The SEC has a strong regulatory agenda to ensure that the capital markets, including the shadow banking system in particular, are properly and fully regulated to protect the public. .” Advocacy group. “We need regulators and supervisors at the Federal Reserve and elsewhere that are as committed to aggressive and robust regulation of financial institutions as the SEC is in the United States.”