Gary Gensler is the most controversial man in American finance

How many Securities and Exchange Commission chairs can you name? Even in Washington it is hard to imagine a passer-by being able to come up with more than one. Perhaps the best known is Joe Kennedy, the sec’s first chairman, who took office during the Depression when Americans had lost faith in markets and were clamouring for protection against conmen and fraudsters. And he is most famous for fathering a president.

Yet during his time at the SEC, Gary Gensler, the current chair, has become remarkably well-known, even notorious. So much so that on July 27th, when Donald Trump, the Republican presidential candidate, gave a speech at a bitcoin convention, his biggest cheer came when he announced: “On day one I will fire Gary Gensler and appoint a new SEC chairman.” Mr Trump appeared taken aback by the roar. “I didn’t know he was that unpopular. Wow...Let me say it again.” He repeated: “On day one I will fire Gary Gensler.”

In reality, Mr Trump will do no such thing. Every SEC chair since the agency was set up in 1934 has resigned when the presidency changed party, allowing the new administration to make its own pick.

The crypto crowd is just the noisiest example of the criticism Mr Gensler has faced during his time in office. He has also riled the likes of Ken Griffin, boss of Citadel, a mighty hedge fund, with rule changes in the Treasury market and ticked off bosses of private-market funds with new disclosure rules. With his term possibly near its end, he sat down for an interview with The Economist on July 30th.

There is no disputing that Mr Gensler has been productive. “We laid out an agenda to propose around 50 sets of new rules,” he points out. “And we’ve now...completed about three-quarters.” If he finishes the rest, his tally will amount to 15% more rules than Jay Clayton, his predecessor, and more than double the number of Mary Jo White, Mr Clayton’s predecessor.

Mr Gensler’s detractors portray this as overreach. Yet he entered office with an urgent to-do list. His appointment in 2021 came a year after the Treasury market, the world’s most important capital market, briefly ceased to function; a few months after retail traders pushed up GameStop shares 15-fold in a fortnight, forcing brokerage firms to the brink; and at the time of a crypto frenzy. Mr Gensler has pushed through sweeping changes—not because he is meddling, he says, but because they were required.

If there is a philosophy to his agenda it is that more transparency is better, competition is good and regulators must keep moving because markets do. “We’ve updated our rules, because technology rapidly changes, because business models change. Nothing stands still in life,” he says. Mr Gensler sees much of crypto as being securities, and therefore under his remit (the industry vehemently disagrees). His actions against the sector have had mixed results, with lawsuits progressing against big players like the crypto exchanges, even as some have stalled.

It is his other actions, though, that are more consequential. Take the stockmarket. In 2021, in part owing to growing settlement risk associated with GameStop trading, clearinghouses, the institutions that settle equity trades, “said to the main brokerage houses, ‘We can’t take any more buy orders for these listed stocks like GameStop,’” recalls Mr Gensler. “The investing public was shut out of the market. That wasn’t right.” Since May 28th, equities in America have settled “t+1”, the day after a trade occurs, rather than “t+2”, reducing the risk of a repeat. Mr Gensler is also planning changes to how exchanges operate, such as by allowing them to quote stock prices in smaller increments, as marketmakers, their competitors, already do.

In the Treasury market, trades will be routed through clearinghouses by the end of 2025, a change Mr Gensler hopes will usher in more trading between a greater range of counterparties. Rather than trades going through a bank and dealers, as is common now, it might be possible for hedge funds to trade directly with asset managers. As well as functioning better in times of stress, he thinks these changes will promote competition: “On the margin if we save just one basis point—and I’m not making any predictions—but even if we save one basis point, that’s quite dramatic for the US taxpayer in a $28trn market.”

Mr Gensler is not surprised that he and the financial industry do not always see eye to eye. “Whether you’re a diamond dealer, an auto dealer, or a stock or bond dealer…opacity, darkness, tends to help,” he says. “Adam Smith wrote about this in the 18th century: transparency helps markets.” This is a lesson that his own time in industry drilled home. “I worked at Goldman Sachs for many years. And there were a number of sayings...one was ‘opacity or darkness [is] the friend of the firm.’”

Yet this enthusiasm for transparency has led him to push boundaries. His proposals for climate disclosure, which would be onerous, have been challenged in the courts. Sweeping regulations for private-market funds, which would have required quarterly statements on performance and fees, and also restricted their ability to charge levies, have been thrown out.

Mr Gensler expresses a willingness to adapt. “If a court rules one way, I adjust. What do you do?” But he will adapt, not relent. Rather like Lina Khan, the chair of the Federal Trade Commission, another regulator, his term has been defined by a dogged pursuit of a big agenda. Yet unlike Ms Khan, he has more to show for his efforts, and has suffered fewer setbacks. If he remains in post, Wall Street and crypto should expect more of the same.

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