Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: I'm David Gerro, host of The Big Take, and today
Speaker 2: I'm sharing an episode from my series of Exit interviews.
Speaker 2: I spoke with senior officials in the Biden administration ahead
Speaker 2: of Donald Trump's inauguration as they prepared to wind down
Speaker 2: their work. These conversations were wide ranging, and in this one,
Speaker 2: taped on January eighth, Securities and Exchange Commission Chair Gary
Speaker 2: Gensler discusses his approach to the job, the blowback he's
Speaker 2: gotten from critics, including President Elect Trump himself, and the
Speaker 2: challenges he expects AI and Crypto will pose for his successor.
Speaker 2: Gary Gensler has less than two weeks left as Wall
Speaker 2: Street's top cop as the chair of the u S
Speaker 2: Securities and Exchange Commission. He took the job in April
Speaker 2: of twenty twenty one, not too long after the Game
Speaker 2: Stop Short Squeeze, and during Gensler's tenure, the SEC has
Speaker 2: taken action against a number of high profile crypto executives.
Speaker 2: He's focused a lot on protecting investors, which is central
Speaker 2: to the agency's mission. Bloomberg's Jonathan Faraoh asked Gensler about
Speaker 2: that in the context of crypto and meme stocks in
Speaker 2: his first interview with Bloomberg as SEC chair, just a
Speaker 2: few months after he.
Speaker 3: Started, Gary, what do you do for a group of
Speaker 3: investors that don't want your protection? Well, I'm going to
Speaker 3: be animated every day in this job by working families,
Speaker 3: and working families need the protection.
Speaker 2: Gensler's approach to enforcements in the world of crypto especially
Speaker 2: made him unpopular. He maintains most cryptocurrencies are in fact securities,
Speaker 2: and therefore are subject to regulation by the SEC. President
Speaker 2: elect Donald Trump campaigned in part on getting rid of Gensler.
Speaker 3: One day one, I will fire Gary Gensler and appoint
Speaker 3: a new SEC chair.
Speaker 1: I didn't know who's that unpopular? Well, I didn't know
Speaker 1: who's that unpopular.
Speaker 4: Let me say it again.
Speaker 2: On day one, I will fire Gary Gestler.
Speaker 4: Who.
Speaker 2: Well, Trump will not have to do that. On November
Speaker 2: twenty first, Gensler announced his decision to step down on
Speaker 2: inauguration Day at noon, which led to much rejoicing in
Speaker 2: the world of crypto. At least on TikTok, Oh my god,
Speaker 2: it's finally here. Gary Gandler officially resigns from the SEC.
Speaker 2: This demon has been torturing the entire crypto industry for
Speaker 2: like three to four years, literally regulating through enforcement and
Speaker 2: going off to nearly every major crypto company in the
Speaker 2: United States. This week I went to Washington to interview
Speaker 2: the SEC chair. It's the third in a series of
Speaker 2: conversations I've had with members of President Biden's administration who
Speaker 2: are leaving government, including Treasury Secretary Janet Yellen and Secretary
Speaker 2: of State Anthony Blincoln. Let's go down to Bloomberg News
Speaker 2: as David Gara, who is sitting down with the outgoing
Speaker 2: chair of the SEC in Washington. David Ordio, Thank you
Speaker 2: very much, and welcome to our listeners and viewers worldwide.
Speaker 2: I'm here with Chair Gary Gensler in his office in Washington,
Speaker 2: d C. Great to speak with you, Great to be
Speaker 2: with you, David. Part of it was live on television
Speaker 2: and radio, but we kept the conversation going when the
Speaker 2: cameras cut away. I asked him to reflect on his
Speaker 2: time as the US's top securities regulator and what it's
Speaker 2: like to be called out by the past and future
Speaker 2: president along with the world's richest man, and what's next
Speaker 2: for the SEC. I'm David Gura and This is the
Speaker 2: big take from Bloomberg News Today. On the show, an
Speaker 2: exit interview with the thirty third Chair of the US
Speaker 2: Securities and Exchange Commission, Gary Gensler, his views on crypto,
Speaker 2: on AI, on China, and what advice he has for
Speaker 2: his successor. I want to start first just by asking
Speaker 2: you how you're feeling here with less than two weeks
Speaker 2: left in your term. You happen subject to fair amount
Speaker 2: of attacks, some thank you all. How have you processed
Speaker 2: all of that?
Speaker 3: You walk into this central square and you debate these
Speaker 3: important things for three hundred and thirty million Americans. I've
Speaker 3: worked over the years with Hillary Clinton on a number
Speaker 3: of campaigns, and I remember Hillary saying once like, if
Speaker 3: you're not willing to be attacked, you can't go into
Speaker 3: the public square and debate policy. And so I think
Speaker 3: it's part of our great democracy. It's a great privilege
Speaker 3: to be in a role like this. But what's remarkable
Speaker 3: about this role is it oversees the one hundred and
Speaker 3: twenty trillion dollar capital market, which touches everything in our economy.
Speaker 3: Because you've got to raise money for most of what
Speaker 3: we do in our economy, and people save you ask
Speaker 3: about the attacks and things like that.
Speaker 1: That's what public policy is about.
Speaker 2: You came into this job, you gave a big speech
Speaker 2: in which you analogize 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 I've really been laboring the metaphor. But is
Speaker 2: it less of a wild West than it was? As
Speaker 2: you leave this office.
Speaker 3: My daughters if they ever watched this interview, well, as
Speaker 3: we're your spurs, dad, I think that we've done some
Speaker 3: good things. Look, I came in. My predecessor, Jake Clayton,
Speaker 3: who was in this office, had also tried to address
Speaker 3: this new emerging part of finance. Jay was trying to
Speaker 3: address it, and he brought eighty enforcement actions in this area.
Speaker 3: We've brought in about one hundred in our four years.
Speaker 1: It was consistent.
Speaker 3: I've been around finance for over four decades, and everything
Speaker 3: in the market's trade on a mixture of fundamentals and
Speaker 3: sentiment at any given time. I've never seen a field
Speaker 3: that's so much wrapped up in sentiment and not so
Speaker 3: much about fundamentals. And these ten than fifteen thousand projects
Speaker 3: many of them will not survive. They're like venture capital investments.
Speaker 3: They're not going to survive. But they're are also a
Speaker 3: fair number of small pump and dump schemes and other
Speaker 3: things in this And of course we've lived through a
Speaker 3: few years where they became notorious, but they're in jail.
Speaker 3: The sambank and Freeds and the do Kwans where tens
Speaker 3: of billions of dollars were lost by investors.
Speaker 4: Settle something for me, because I think when you came into.
Speaker 2: 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, and thought that you would be perhaps a
Speaker 2: champion of them. Has there been an evolution in the
Speaker 2: way that you approach crypto over that transition from academia
Speaker 2: to hear or while you've been here, people think you
Speaker 2: are somebody who's adamantly opposed.
Speaker 1: To here's the evolution.
Speaker 3: When you're in academia or when you're not in this job,
Speaker 3: you can study something and observe it as I did,
Speaker 3: and try to teach students what's the value proposition about
Speaker 3: this new technology, what's the value proposition of this new
Speaker 3: investment vehicles?
Speaker 1: But then when you're in this job.
Speaker 3: This is a chair of a five member commission over
Speaker 3: roughly five thousand people. That's a law enforcement agency, and
Speaker 3: this is a field rife with challenges and non compliance
Speaker 3: with the securities laws. You take an oath of office,
Speaker 3: you do what you can to protect the investing public.
Speaker 2: On that note, we saw in this last election cycle
Speaker 2: one hundred and thirty five million dollars spent by crypto
Speaker 2: companies on races across the country.
Speaker 3: Did you notice that very few, if any, actually advertised
Speaker 3: on crypto?
Speaker 4: I didn't note that.
Speaker 2: Just does that give you concern the role that the
Speaker 2: crypto industry is playing not just within these halls, but
Speaker 2: across Washington, across the country in those rings.
Speaker 1: I just think of every day investors.
Speaker 3: I think it's very consequential to every day investors that
Speaker 3: we put in place rules that insiders of companies, seniors
Speaker 3: executives can no longer just file a plan on a
Speaker 3: Monday when they had material non public information and sell
Speaker 3: their stock on that same Monday. But we've put in
Speaker 3: place rules that they will have to wait ninety days.
Speaker 1: And why ninety.
Speaker 3: Days because then they might release that material non public information.
Speaker 3: So I think that's what we really focused on and
Speaker 3: that every day investors have benefited from that.
Speaker 4: Let me pivot to risks.
Speaker 2: And you've sounded the alarm about artificial intelligence at FSOC,
Speaker 2: you gave a big speech at you a law school,
Speaker 2: you did one at the National Press Club.
Speaker 4: It's something that you're clearly thinking.
Speaker 3: I even wrote about it when I was at MITRE
Speaker 3: you go four and a half years ago.
Speaker 2: We are facing now four years where one geopolitical consultancy
Speaker 2: says we're having AI unbound, that there will be less
Speaker 2: regulatory interest in AI.
Speaker 4: What are the consequences of that?
Speaker 2: As you see, it's the financial markets not having anything
Speaker 2: close to a robust regulatory regime for AI.
Speaker 3: It's very dramatic advancements. I think it's going to transform
Speaker 3: so many parts of our economy in good ways. We
Speaker 3: are automating this, and the Industrial Revolution was automating this
Speaker 3: and this, and for those that couldn't see, I meant
Speaker 3: we're automating our brains and not our biceps, our biceps
Speaker 3: and our thighs. And I think it will boost productivity,
Speaker 3: but there'll be a lot of disruptions in terms of
Speaker 3: the capital markets, in terms of finance. I think about
Speaker 3: the challenges of the conflicts if your robo advisor, are
Speaker 3: they giving you advice on behalf of the asset manager
Speaker 3: or you?
Speaker 1: And who are they putting first? And it could be
Speaker 1: in some.
Speaker 3: Opaque mathematical formula deep inside the algorithm.
Speaker 2: Another challenge facing the agency it could see its budget
Speaker 2: slashed under the incoming Trump administration, which is promised to
Speaker 2: reduce on government agencies across the board.
Speaker 4: That's in a moment.
Speaker 2: SEC chair Gary Gensler has already announced he's leaving his
Speaker 2: job at noon on inauguration Day. It's been well established
Speaker 2: that President Elect Trump would not have left him in
Speaker 2: the job. I wanted to ask Gensler about Trump's plans
Speaker 2: for the SEC and other agencies. The ethos, it seems,
Speaker 2: of this incoming administration is to cut staff and cut
Speaker 2: bureaucracy here in Washington. What would that mean for this
Speaker 2: agency if you had a less stout.
Speaker 3: I think it would be unfortunate because we're already spread
Speaker 3: too thin. We get forty or fifty thousand tips, complaints
Speaker 3: and referrals a year a year a year now back
Speaker 3: to an earlier subject, I think eighteen percent of those
Speaker 3: are from the crypto field, and at any given time,
Speaker 3: we only have the staff to maybe investigate some small portions.
Speaker 3: So we're constantly trioshing.
Speaker 2: Has there been an SEC DOGE summit and has anyone
Speaker 2: working for that new Elon musk I vet Ramaswami outfit
Speaker 2: come to the agency to talk about potential changes or.
Speaker 1: I think you.
Speaker 3: Know, it might sound familiar to what Tony Blinkoln taught you.
Speaker 3: There's one president at a time, there's one commission at
Speaker 3: a time. I'm proud of this agency, but that which
Speaker 3: folks do after January twentieth take up at that point
Speaker 3: in time.
Speaker 2: Looking ahead, Have you had a conversation with Paul Atkins,
Speaker 2: your presumptive successor here, and if so, what did you
Speaker 2: stress to him is most important to think about as
Speaker 2: he would take over the High Agency.
Speaker 1: Paul and I did catch up.
Speaker 3: You know, he knows this agency, he's worked at this
Speaker 3: agency chair and he was a commissioner for six years,
Speaker 3: and so I won't say all the things a private conversation,
Speaker 3: but Richard Breeden was the first person to hire Paul
Speaker 3: and to the agency. Richard was chair under President Bush
Speaker 3: number forty one, and I shared with Paul the advice
Speaker 3: that Richard gave me coming into this job, and Richard said, remember,
Speaker 3: every single day in the job is one day closer
Speaker 3: to when you will join the former's club. And you
Speaker 3: can take that a number of ways, but I took
Speaker 3: that as Richard's way of saying, every day is such
Speaker 3: a privilege, use it well, use it on behalf of
Speaker 3: the American public. And so that was my main advice
Speaker 3: to Paul.
Speaker 2: A sort of big thing question just about financial regulation
Speaker 2: and the US's role in the world. You've said, though
Speaker 2: the US equity markets are the deepest, most liquid in
Speaker 2: the world, we can't take that leadership for granted. At
Speaker 2: this moment of transition. There will be some I imagine,
Speaker 2: who wonder just about the certainty of regulation in this
Speaker 2: country and how the US holds onto that position of
Speaker 2: prominence or preeminence in the world.
Speaker 4: Are we doing ourselves a disservice?
Speaker 2: Are we shooting ourselves in the foot by having these
Speaker 2: kind of radical changes in leadership of regulatory agencies. So
Speaker 2: it went from Jake Clayton to you. You had your own
Speaker 2: regulatory agenda. Now we'll go, presumably to a Paul Atkins one,
Speaker 2: and he'll prioritize certain things push other things to the wayside.
Speaker 2: Investors love certainty. Is there an inherent lack of certainty
Speaker 2: in the way that we have financial regulation in this country.
Speaker 2: That's detrimental.
Speaker 3: I think democracies are a very good thing. The American
Speaker 3: public gets to speak through their votes as to who
Speaker 3: sits and seats of consequence like I sit in. I
Speaker 3: think what's really important for regardless of who's in this seat,
Speaker 3: is that it can't take for granted they were going
Speaker 3: to be number one, and that their capital markets might
Speaker 3: be the deepest and liquid now.
Speaker 1: But if they get more.
Speaker 3: Costly, if they get rickety and unstable in any way,
Speaker 3: if they favor certain folks rather than having a really
Speaker 3: competitive environment where you have equal and open access to
Speaker 3: the capital markets, full access, I should say, and fair access,
Speaker 3: then we could give up our mantle. And it relates
Speaker 3: to the dollars role in the world. A lot of
Speaker 3: people talk about the dollar as a reserve currency. I say,
Speaker 3: that's interesting, important, maybe, but it's really about our capital
Speaker 3: markets that are forty to forty five percent of the
Speaker 3: world's capital markets. Our stock market is sixty trillion dollars
Speaker 3: in size, the French stock market, the UK stock market.
Speaker 1: Three trillion. Twe to three trillion.
Speaker 3: We have single companies that have market values more than that,
Speaker 3: even the Chinese stock markets maybe a twelve thirteen trillion.
Speaker 1: But we can't take it for granted.
Speaker 3: Got to keep it good, disclosure, free of fraud, manipulation,
Speaker 3: and really have as best you can and competitive all
Speaker 3: to all trading. And then markets go up, markets go down,
Speaker 3: and you know, people get to decide what risks they
Speaker 3: want to take.
Speaker 4: Lastly, what's next for you?
Speaker 2: Do you have plans for what you'll do come January
Speaker 2: twentieth when you leave this job.
Speaker 3: I don't have anything do analyx on this, on this program.
Speaker 3: It really is a remarkable agency. And I want to
Speaker 3: hand it off well to the next team. And I'm
Speaker 3: very focused, of course on the staff, the great staff
Speaker 3: here over these next ten days as well, and then
Speaker 3: hand it.
Speaker 1: Over to others that will have the privilege.
Speaker 3: As Richard Breden said that each day is one day
Speaker 3: closer to when they're join the former's club.
Speaker 2: Sure againstter, Thank you very much, Thank you appreciate it,
Speaker 2: Thank you. This is the Big from Bloomberg News. I'm
Speaker 2: David Gura. This episode is produced by David Fox and
Speaker 2: Jessica Beck. It was mixed and sound designed by Alex
Speaker 2: Segura and fact check by Adriana Tapia. Our senior producer
Speaker 2: is Naomi Shaven, who also edited this episode with Aaron
Speaker 2: Edwards and Meghan Howard. Our senior editor is Elizabeth Ponso.
Speaker 2: Our executive producer is the cole Beemster Bore. Sage Bauman
Speaker 2: is Bloomberg's head of podcasts. If you liked this episode,
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Speaker 4: It helps people find the show. Thanks for listening.
Speaker 2: We'll be back next week.