Gary Gensler appears to have won the race to be the next sheriff of Wall Street after elbowing out a centrist rival.
According to multiple insiders, President-elect Joe Biden’s transition team has chosen Gensler — a former Goldman Sachs executive-turned-Obama administration financial regulator — as its nominee to chair of the Securities and Exchange Commission.
Sources attributed the decision to the Democrats’ surprise win of the Senate during last week’s runoff elections in Georgia, allowing Biden to favor the more progressive candidate.
Only two weeks ago, people close to the Biden transition team had penciled in centrist Robert Jackson Jr. — an NYU law professor and SEC commissioner under Trump — as the SEC frontrunner because he was seen as more likely to win confirmation by a GOP-controlled Senate.
Commodity Futures Trading Commission Chair Gary Gensler testifies at a Senate Banking, Housing and Urban Affairs Committee hearing on Capitol Hill July 30, 2013.REUTERS
“If Gensler hadn’t gotten the SEC, progressives would have been shut out,” explained a person familiar with the transition’s thinking. “Jackson argued that he’s also a progressive, but I don’t know many progressives who would agree.”
“Bob Jackson knows his stuff, but Biden promised to reign in Wall Street,” added a Beltway player. “[Elizabeth] Warren and Bernie [Sanders] will be happy with Gensler, and he gives Biden cover from AOC and her crew. This pick might actually even annoy Wall Street.”
Gensler, 63, is a former partner at Goldman Sachs who joined the Clinton administration as a senior advisor to his former Goldman boss, Treasury Secretary Robert Rubin. During the George W. Bush presidency, Gensler stuck around DC as a senior Senate staffer and a key architect of the Sarbanes-Oxley regulation.
Barack Obama put Gensler in charge of the Commodity Futures Trading Commission in 2009 where he became infamous among his former Wall Street colleagues for overhauling the regulation of derivatives that created the 2008 financial crisis. Gensler also used the CFTC to uncover and prosecute the massive Libor rate-rigging scandal.
“Gary Gensler started off as another ‘Government Sachs’ guy, but he has shirked that tag harder than anyone in history,” the Beltway insider recounted.
“He’s not Wall Street’s top choice,” added a regulatory lawyer. “At the CFTC, he was considered an active and well-regarded regulator.”
For the last few years, Gensler has been a professor at MIT. Biden tapped him to run the part of his transition team that selects nominees for agencies like the CFTC and SEC.
“Gensler took that job when it looked like the GOP had the Senate,” said the Capitol Hill insider with knowledge of the transition. “He wanted SEC for himself but there was no way he’d get the votes. After Georgia, the math has changed, and he knew it.”
Like Gensler, the 43-year-old Jackson is a Wall Street and Treasury alum, having worked at Bear Stearns and on the Obama administration’s Treasury team that crafted the Dodd-Frank legislation.
Jackson is a famous policy wonk in DC circles. After being unanimously approved to become an SEC commissioner by the Senate Banking Committee in January 2017, Jackson took on major policy initiatives at the agency on everything from opposing mandatory arbitration in discrimination lawsuit to how the SEC regulates new exchanges.
Neither Gensler nor Jackson responded to a request for comment.