Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Welcome to our listeners and viewers worldwide. I'm here with
Speaker 2: Cheergary Gensler in his office in Washington, d C. Great
Speaker 2: to speak with you, Great to be with you.
Speaker 1: David.
Speaker 3: You've had a very active agenda during your tenure here.
Speaker 2: I want to get to as much of that as
Speaker 2: I can, but I want to start first just by
Speaker 2: asking you how you're feeling here with less than two
Speaker 2: weeks left in your term. You have been subject to
Speaker 2: fair amount of attacks, some vitriol. How have you processed
Speaker 2: all of that.
Speaker 4: It's a great privilege to be in a role like this.
Speaker 4: I'm the thirty third chair. It's a big country. A
Speaker 4: lot of people could do this job, so I really
Speaker 4: I start with it's just such a privilege to be here,
Speaker 4: and thank you to Joe Biden for asking me to
Speaker 4: do it. But what's remarkable about this role is it
Speaker 4: oversees the one hundred and twenty trillion dollars capital market,
Speaker 4: which touches everything in our economy because you've got to
Speaker 4: raise money for most of what we do in our
Speaker 4: economy and people save. So I feel terrific, And you
Speaker 4: ask about the attacks and things like that.
Speaker 1: That's what public policy is about.
Speaker 4: You walk into this central square and you debate these
Speaker 4: important things for three hundred and thirty million Americans. I've
Speaker 4: worked over the years with Hillary Clinton on a number
Speaker 4: of campaigns, and I remember Hillary saying once like, if
Speaker 4: you're not willing to be attacked, you can't go into
Speaker 4: the public square and debate policy. And so I think
Speaker 4: it's part of our great democracy.
Speaker 2: I look at who is inveighing against you and who's
Speaker 2: throwing that invective, and it's the president elect, it's the
Speaker 2: world's richest man.
Speaker 3: Does it feel.
Speaker 2: Different to you than what you, I'm sure experienced after
Speaker 2: the Global Financial Crisis when you were at the CFTC
Speaker 2: as the atmosphere. Has the environment changed for regulators like yourself, Well.
Speaker 4: I think it does change. What we do here at
Speaker 4: this great agency is look out for every day Americans,
Speaker 4: people just trying to save for a better future, and
Speaker 4: try to move through things that help them like we've done.
Speaker 4: Like even shortening the settlement cycle from two days to
Speaker 4: one day might sound geeky behind the scenes, but it
Speaker 4: means you get your money one day faster, for instance,
Speaker 4: or getting privacy notices there was no federal rule that
Speaker 4: you needed to get a notice if your data was hacked.
Speaker 4: Then we put in place some rules to do that.
Speaker 4: So we're looking out for every day Americans, trying to
Speaker 4: lower the cost of the markets to trade stocks, to
Speaker 4: tarry de bonds. But it doesn't surprise me that then
Speaker 4: there's some in the middle of the market. They're called brokers,
Speaker 4: they're called dealers, they're called intermediary stock exchanges who they
Speaker 4: like their business model. And if we're changing the rules
Speaker 4: to benefit every day Americans, they might have thoughts on
Speaker 4: that and object and that's part of the process. But
Speaker 4: our clients, ultimately people at their kitchen tables.
Speaker 3: Let me ask you about one facet of that. On
Speaker 3: twenty million dollar, trillion dollar trillion, it's a big number
Speaker 3: of tea with the T, and that's crypto.
Speaker 2: And you've been you've offiable point out it's a small
Speaker 2: sliver of that total multi trillion dollar package. But you
Speaker 2: came into this job. You gave a big speech in
Speaker 2: which you analogized the crypto world to the wild West.
Speaker 2: I guess that makes you the sheriff. So as you
Speaker 2: get ready to hang up your spurs, jeez, less of
Speaker 2: a wild not really belaboring the metaphor, but is it
Speaker 2: less of a wild West than it was?
Speaker 4: As you leave this office, My daughters if they ever
Speaker 4: watched this interview, well, we're your spurs, Dad. I think
Speaker 4: that we've done some good things. Look, I came in.
Speaker 4: My predecessor, Jake Clayton, who was in this office, had
Speaker 4: also tried to dress this new emerging part of finance.
Speaker 4: And as you say, it's less than one percent of
Speaker 4: our overall financial markets. Uh, but it it was then
Speaker 4: when Jay was trying to address it, and he brought
Speaker 4: eighty enforcement actions in this area. We've brought in about
Speaker 4: a hundred in our four years. It was consistent. It's
Speaker 4: maybe about five percent of what we do in our
Speaker 4: law enforcement. I means there's ninety five percent on f
Speaker 4: in a sense unfortunately about other things you know, scammers
Speaker 4: and fraudsters and so forth. But in this field, I
Speaker 4: it's rife with bad actors. It's it's it's and let
Speaker 4: me just split the field into two just for a minute.
Speaker 4: The public knows a lot about bitcoin, which is uh,
Speaker 4: depending upon its market value on any given day, is
Speaker 4: two thirds to eighty percent of the market value of crypto,
Speaker 4: and then there's a l everything else where some people
Speaker 4: say bitcoin and ethereum.
Speaker 1: And everything else.
Speaker 4: These ten or fifteen thousand projects, they're raising money from
Speaker 4: the public, and the public's investing, or they're just the
Speaker 4: public's investing hoping for a better future. I've been around
Speaker 4: finance for over four decades, and everything in the market's
Speaker 4: trade on a mixture of fundamentals and sentiment at any
Speaker 4: given time. I've never seen a field that's so much
Speaker 4: wrapped up in sentiment and not so much about fundamentals.
Speaker 4: And these ten thousand to fifteen thousand projects, many of
Speaker 4: them will not survive. They're like venture capital investments. They're
Speaker 4: not gonna survive. But they're also a fair number of
Speaker 4: small pump and dump schemes and other things in this
Speaker 4: And of course we've lived through a few years where
Speaker 4: you know, they became notorious, but they're in jail. The
Speaker 4: sambank and Freed's and the czs and the dough quons
Speaker 4: uh where tens of billions of dollars were lost by investors.
Speaker 2: Can I ask you about those, because early on, when
Speaker 2: you talked about enforcement, you said bringing high profile.
Speaker 3: Cases could lead to a change in in behavior.
Speaker 2: Are Are you satisfied that those cases has led to
Speaker 2: a change in behavior in in the space in in.
Speaker 4: Particular, it's it's a field that built up around non compliance.
Speaker 4: And I'm proud of what we've done of building on
Speaker 4: what UH chair Clayton and others had done previously. I
Speaker 4: think there's still work to be done, particularly I'm i'm
Speaker 4: I'm saying about these ten or fifteen thousand alternative coins
Speaker 4: that UH there and the intermediaries themselves. I think there's
Speaker 4: still work to be done, and and I think the
Speaker 4: public is probably aware of this, and less than ten
Speaker 4: percent of the public invests in this field. I think
Speaker 4: there is feder reserve and even we've did a survey
Speaker 4: here these public figures, it's somewhere between seven and nine
Speaker 4: percent of the public should be aware of these are
Speaker 4: highly speculative, volatile investments, and they're not getting the full
Speaker 4: and fair disclosure that's appropriate. What we're about here at
Speaker 4: the Securities and Exchange Commission for ninety years is letting
Speaker 4: the public decide what they want to invest in, and
Speaker 4: secondly that the intermediaries, the brokers, the stock exchanges, the
Speaker 4: advisors are giving that advice and doing what they're doing
Speaker 4: without fraud and manipulation and so forth.
Speaker 2: Settle something for me, because I think when you came
Speaker 2: into office, a lot of people looked at your immediate background,
Speaker 2: having researched a lot of digital assets, worked on them
Speaker 2: at mit, that you would be perhaps a champion of them.
Speaker 2: Has there been an evolution in the way that you
Speaker 2: approach crypto over that transition from academia to hear or
Speaker 2: while you've been people think you are somebody who's adamantly opposed.
Speaker 1: To here's the evolution.
Speaker 4: When you're in academia or when you're not in this job,
Speaker 4: you can study something and observe it as I did,
Speaker 4: and try to teach students what's the value proposition about
Speaker 4: this new technology, what's the value proposition of this new
Speaker 4: investment vehicles? But then when you're in this job, this
Speaker 4: is a chair of a five member commission or roughly
Speaker 4: five thousand people. That's a law enforcement agency. And so
Speaker 4: now one gets in this chair building upon my predecessor
Speaker 4: had brought eighty cases, so we brought about one hundred.
Speaker 4: And this is a field rife with challenges and non
Speaker 4: compliance with the securities laws. So sometimes people you know,
Speaker 4: you take an oath of office. You do what you
Speaker 4: can to protect the investing public.
Speaker 3: Just another question about evolution of thinking.
Speaker 1: UH.
Speaker 2: Turning to the the climate related rules that have been
Speaker 2: passed by by the SEC, some say that you fashioned
Speaker 2: yourself as kind of a climate crusader.
Speaker 1: Now are they?
Speaker 3: Are they wrong in that in that supposition?
Speaker 1: I haven't heard that.
Speaker 4: I'm a securities I I I was in Culman Sachs
Speaker 4: for eighteen years of fair a number of years ago now,
Speaker 4: and I deeply believe in markets, and I came into
Speaker 4: a role that there were some outsiders that said, use
Speaker 4: the securities laws to promote a an agenda. But we're
Speaker 4: just a securities regulator.
Speaker 1: And and I deeply believe that.
Speaker 4: But what we found is that not just hundreds, but
Speaker 4: over a thousand companies were already making disclosures to their
Speaker 4: investors about climate risks. And I'm very proud of the
Speaker 4: work we did to bring some consistency in those UH.
Speaker 4: Disclosures all based in materiality, meaning that the only thing
Speaker 4: that the.
Speaker 1: Various investors need to.
Speaker 4: Look to, or would would I'm sorry, the only thing
Speaker 4: the public companies would need to do is to make
Speaker 4: disclosures about their material greenhouse gas emissions and not their
Speaker 4: supply chain, just their emissions and how they manage certain
Speaker 4: risk in that field.
Speaker 1: Uh.
Speaker 4: One interesting number of the top thousand companies in the
Speaker 4: US and the capital markets, what percentage of them do
Speaker 4: you think already make greenhouse guests disclosures.
Speaker 3: No, it is the majority, it's over.
Speaker 4: Sixty percent, and so so investors. We heard from not
Speaker 4: just hundreds, but thousands of investors that say they make
Speaker 4: decisions over their A material disclosures.
Speaker 1: So our role is just to try to bring some
Speaker 1: consistency to that.
Speaker 2: Chick Gant and I are going to keep talking. The
Speaker 2: full interview will be available on The Big Take podcast