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Gary Gensler: Joe Biden’s Joseph P. Kennedy

By Knut Rostad on January 14, 2021

This article originally appeared on Advisor Perspectives.

If Gary Gensler becomes the SEC chairperson, it will harken back to the SEC’s origins and its first chairman, Joseph P. Kennedy.

Gensler is uniquely well-suited for the task and issues facing investors and the markets.

So was Kennedy. President Roosevelt surprised and dismayed partisans by insisting that Kennedy be named SEC chairman. The president recognized who better to regulate the market than someone who succeeded in it. He was a millionaire in the late 1920s.

Kennedy was very aware of market excesses from direct experience and understood the need for the financial reforms of the 1930s. Gensler likewise had an excellent perch from the nation’s most prominent investment banking firm, Goldman Sachs. Gensler may well be Joe Biden’s Joe Kennedy.

Gensler succeeded at Goldman Sachs, where he worked from 1979 to 1997. He became one of the youngest partners in Goldman’s history at age 30 in mergers and acquisitions. He headed the firm’s media group, led fixed income and currency trading in Asia, and co-headed finance, being responsible for the firm’s worldwide controllers and treasury efforts. He left at age 40.

He also was a senior advisor to Senator Paul Sarbanes in writing the Sarbanes-Oxley Act (2002) and was Under Secretary of the Treasury for domestic finance, and Assistant Secretary of the Treasury during the Clinton Administration. In recognition for his service, he was awarded Treasury’s highest honor, the Alexander Hamilton Award.

Gensler chaired the U.S. Commodity Futures Trading Commission (CFTC) from 2009 to 2014, leading the Obama Administration’s reform of the $400 trillion swaps market.

He quickly became known for his energy, work ethic and aggressiveness in advancing Dodd Frank reforms and developing rules to implement them. David Meister, his selected enforcement chief, quipped, “Gary is not a micromanager. He only called me on nights, weekends and holidays.”

Then SEC Chair, Mary Shapiro told the New York Times, “His aggressiveness was exactly what was necessary.”

Bart Chilton, a Democrat CFTC commissioner, told the Financial Times (FT), “We needed an aggressive and persistent advocate for implementation of the law Congress passed and that would not have happened if we had some milquetoast bureaucrat.”

The FT also noted his critics called him “a bull in the china shop” for aggressively pushing derivative reforms that lawmakers and the industry were confused and angry.

Gensler told the FT, “Our goal was reforming and bringing transparency to the swaps market. Everything organized around that.”

The Wall Street Journal reported yesterday, “Mr. Gensler developed a reputation among his colleagues for bare knuckle tactics as he drove to create a regulatory framework for derivatives, a multi-trillion dollar market that had largely been free from federal oversight.”

Benjamin Edwards, Professor of Law, Las Vegas Boyd School of Law, put tactics and aggressiveness into context, saying, “Gensler has real experience taking on Wall Street for real abuses. He led a strong effort to root out corruption after the LIBOR-rigging scandal. I’m confident he’ll stand up for the public as Chair of the SEC.”

Gensler was the recipient of the Institute for the Fiduciary Standard’s 2014 Frankel Fiduciary Prize. Tamar Frankel, Professor of Law Emerita, Boston University School of Law, noted, “Gary Gensler has consistently followed the principles of fairness, honesty and expertise in politics and governance, the foundation of a thriving and strong financial system.”

Dan Moisand

 

Dan Moisand is a nationally recognized fiduciary fee-only financial planner, an Institute Real Fiduciary™ Advisor and Chair-elect of the CFP Board.

The Institute has enshrined the ‘Moisand Rule’ on fiduciary practices. It is basic and is more important today than ever: “You have to avoid conflicts. If I avoid a conflict, I don’t worry about it.”

Watch the video of Moisand speaking here.

Bob Veres

 

Bob Veres is a long term observer of financial planning. His Newsletter, “Inside information” Is a staple of leading planners. In the May edition he writes about fiduciary and the Institute.

"But a much bigger point is that the fiduciary standard—as Knut Rostad of the Institute for the Fiduciary Standard has pointed out—has been determined by the Supreme Court (1963 ruling) to be at the very heart of the Investment Advisers Act of 1940. It is the foundation of what it means to be an RIA registered with the SEC instead of a tipster or a tout."

- Bob Veres, Parting Thoughts ... The SEC's Own Compliance Culture

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