GOP lawmakers want to gut SEC by adding sixth commissioner
“U.S. capital markets must be protected from a tyrannical Chairman, including the current one.”
The complaints filed by the Securities and Exchange Commission against Coinbase and Binance earlier this month might well have been the last straw.
The controversial regulation by enforcement practice is now being fought in Congress with the introduction of the SEC Stabilization Act by Rep. Warren Davidson, joined by House Majority Whip Tom Emmer.
“U.S. capital markets must be protected from a tyrannical Chairman”
The SEC Stabilization Act aims to fulfill the promise to restructure the SEC and remove Gary Gensler as Chair of the SEC, according to the press release, which adds that the legislation takes corrective action to remove SEC Chair Gensler following “his long series of abuses that have been permitted under the current SEC structure”.
House Majority Whip Tom Emmer said: “American investors and industry deserve clear and consistent oversight, not political gamesmanship. The SEC Stabilization Act will make common-sense changes to ensure that the SEC’s priorities are with the investors they are charged to protect and not the whims of its reckless Chair. Thank you, Representative Davidson, for leading this important effort to restore sanity at the SEC.”
Ohio Republican Rep. Warren Davidson commented: “U.S. capital markets must be protected from a tyrannical Chairman, including the current one. That’s why I’m introducing legislation to fix the ongoing abuse of power and ensure protection that is in the best interest of the market for years to come. It’s time for real reform and to fire Gary Gensler as Chair of the SEC.”
A sixth commissioner for the SEC?
The SEC Stabilization Act argues there is a fundamental flaw in the agency’s structure due to the concerning level of discretion which leaves the other four commissioner positions effectively redundant.
The proposed law aims to adjust the commission to include an additional sixth commissioner, with all rulemaking, enforcement, and investigation authority remaining with the commissioners, who are subject to staggered six-year terms. The bill would also create an Executive Director who oversees the agency’s day-to-day operations.
Additionally, a single political party would never hold more than three commissioner seats at any given time under the proposed bill, which would theoretically provide more stability to the regulatory space and force commissioners to work together prior to approving any significant actions under the SEC’s purview. A sixth commissioner, however, could deem the SEC ineffective to reach any decision.
SEC would be left in a state of deadlock
The bill argues that it is intended to provide a similar structure that is currently in place at the Federal Election Commission, although it is hard to understand why would that be useful. A financial watchdog is supposed to be capable of making decisions, but the FEC is known to be incapable to do so.
The FEC is led by six Commissioners, who are nominated by the president and confirmed by the Senate. Under federal law, no more than three Commissioners can be affiliated with the same political party. While these rules were designed to prevent both major parties from turning the FEC into a partisan institution, requiring a four-vote majority to take substantive action also means that three Commissioners of the same party, acting in concert, can leave the agency in a state of deadlock, which is when the agency is blocked from doing its job.
If the SEC implements the same kind of structure, the United States would no longer rely on its securities financial watchdog to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.
In conclusion, adding a sixth commissioner would effectively bring an end to the SEC.