Gary Gensler (SEC), Rohit Chopra (CFPB) nominations forwarded to Senate

The Senate Committee on Banking, Housing, and Urban Affairs voted 14-10 to forward Gary Gensler’s nomination as SEC chair to the Senate. Two Republicans, Sens. Mike Rounds (S.D.) and Cynthia Lummis (Wyo.), joined 12 Democrats in supporting Gensler’s nomination. The Senate is expected to confirm Gensler’s nomination next week.

Rohit Chopra’s nomination for a five-year term as CFPB director was also recommended to the Senate, even though it was a deadlocked 12-12, party-line vote. Under the rules of the Senate, Majority Leader Chuck Schumer (D-N.Y.) can move for a vote on Chopra’s nomination to the full Senate.

Should Chopra’s nomination be deadlocked in a 50-50 vote in the evenly divided Senate, Vice President Kamala Harris can cast the tie-breaking vote, something she has done three times since taking office. According to the Senate’s website, former Vice President Mike Pence cast 13 tie-breaking votes, including votes to confirm four of President Donald Trump’s cabinet and judicial nominees. 

At the Senate Banking Committee, Chairman Sherrod Brown (D-Ohio) praised Gensler and Chopra, urging the Senate to confirm their nominations so they can get to work for the American people.

Sen. Pat Toomey (R-Penn.), the Committee’s ranking Republican, said he voted against Gensler because he showed during his tenure at the Commodity Futures Trading Commission from 2009-14 a tendency to use the agency’s power to pursue political goals.

“Securities laws are not the appropriate vehicle to press a social or cultural agenda,” Toomey said. He also said Gensler’s answers to the Committee regarding the aftermath of the GameStop market volatility showed a willingness to impose regulations that “will make it more difficult for retail investors to participate in the market.”

Lummis said she was concerned about Gensler’s stance on climate change- and ESG-related disclosures, particularly how they would affect her state’s energy industry.

But she said she was encouraged to hear Gensler will make financial innovation a priority at the SEC. Wyoming has passed numerous laws aimed at encouraging digital currency firms to locate their business in the state.

On Chopra, Toomey said the current commissioner at the Federal Trade Commission did nothing to alleviate his concerns that he will return the CFPB to its stance under President Barack Obama, in which Toomey said it regularly overreached its authority and pursued several illegal enforcement actions.

Chopra, Toomey said, “favors unaccountable regulators with vast powers.”

At his nomination hearing, Gensler said he favored launching a rulemaking process on climate change disclosures for publicly traded companies.

The SEC under the helm of Acting Chair Allison Herren Lee has also made it clear climate- and ESG-related disclosures will be an area of renewed focus for the agency. The issues are pillars of Biden’s political agenda.

David Martin, senior counsel at Covington and formerly director of the SEC’s Division of Corporation Finance, said several other political issues “could well be laced into the disclosure regime” under Gensler, namely political donations and diversity. The agency may launch rulemakings on both topics, he said, to introduce “more texture on these topics into the rules.”