One of the most tangentially impactful people in the country is the Chairman of the SEC, Gary Gensler. The work he does, and the agency he leads affects the financial lives of every American. We assume that more regulation in financial markets means more safety and therefore more gain for investors.
Gensler is a lifelong Democrat who has worked both for Obama and Biden in regulatory functions, nothing wrong with that, political parties put their people into leadership roles. He’s also a Professor at MIT who teaches and believes strongly in the regulatory function of the government in financial markets. Again, nothing wrong there, professors should profess what they think to be true.
Since taking office as the Chairman of the Securities and Exchange Commission, though, Gensler has operated in the high-handed manner that we’ve come to expect from appointees who consider themselves Czars over a field of Subject Matter Expertise more than as a public servant contouring action to serve all Americans. Gensler is a perfect case-in-point.
At MIT he headed the Digital Currency Lab where dozens of crypto tokens were launched, succeeded, and failed. Evidently, he took from this experience that no company should be allowed to issue a cryptocurrency of any real utility without extensive government oversight. Specifically, the SEC chose one of those companies, Ripple, the issuer of a utility token called XRP which is used by financial institutions around the globe to transfer and track money on the blockchain. The SEC said that XRP must be a security because people might buy it in the hopes that the more useful it gets the more valuable it gets and they want to profit, not just to use it. This argument is from an SEC case in the 1940s about orange juice co-ops.
As a result of the case (which to be honest wasn’t filed by Gensler but is still ongoing because he wants it to be), XRP was delisted by most exchanges, saw its value plummet and has been used less in the market which means transaction security has decreased. Ripple sued the SEC for overreach and other administrative law claims and seems poised to win the legal battle … at least I hope so.
Gensler and the unelected bureaucrats like him only ever seem to focus on the precedential value of their decisions, not whether the individual case at hand is legitimate and valuable policy. That’s not how things should be done, but its a hardcore credo of those who think they know better than the rest of us.
Other initiatives that the Chairman has his hands in are the overarching regulations on SPACs, Direct Offerings, and any other novel concept that the market has come up with to navigate around the draconian and often stupefying rules that have been promulgated since Sarbanes-Oxley was passed. Incidentally and not surprisingly, Gensler was one of the authors of SOX which has cost US businesses tens of billions of dollars in compliance costs and made it a fool’s errand to go public in a traditional manner.
Get it yet? The guy who most firmly believes that companies should not go public unless they exhaustingly high standards of public offering and then operations is the guy making the call on who gets to go public in the first place. He’s literally keeping new public companies from being available to the investing public, and when anything threatens to come public in a different (totally legal!) form, he uses the power of regulation and the threat of lawsuits and enforcement to stop them.
This is the government now. Gensler is a Democrat but who cares, Republican appointees in this role might act very much the same. These old regulatory structures (the SEC was formed in 1933) will not hold against the onslaught of really intelligent solutions to modern problems. Holding the line and causing companies to fail to suit your vision for how things should work but don’t is a logical fallacy and a moral failing.
It’s like telling someone not to go swimming because they might drown. They dive in anyway and you put your foot on their head while telling them “I told you so, it’s really very dangerous to swim.”
Great piece on Utility, the Digital Economy and the SEC here.
“What progress, you ask, have I made? I have begun to be a friend to myself.” — Hecato
Research tip from Kevin Kelley: When you want to get a right answer, post an obviously wrong answer on the internet and wait for people to correct you. You’ll receive a plethora of answers in varying degrees of sophistication which will allow you to synthesize a solid approach to a right answer.
This also works when you want to better defend your own ideas from criticism or inaccuracy. Post your core proposition as an absolute and ask people to prove you wrong. They will absolutely light you up, providing you with every argument against your proposition which you can then pick apart to refine your proposition or even … gasp … change your mind?
“You’re only as big as the things that make you angry.”
— Kevin Kelley
In my last post I challenged readers to go over and above for those around them who needed some help. One reader shared the following:
This was one of my most enjoyed and inspiring notes you have sent since reading. Thank you for doing this newsletter, I truly appreciate your work.
And without having read this early this morning, I just forgave a tenant in my commercial building this month as I was watching his business unravel recently. He is still head down and working everyday to get himself out of it. But, here is why I did it…..I remember when he came into rent the space, I was in the same situation as he is now and had to put my head down and work to get myself through it. By renting to him it added much needed relief. I could see it in his eyes that welled up when I said it was my donation to forgive this month towards HIS success. I wrote the check so he didn’t have to and it felt good to return the favor to our Creator when he brought the tenant to me in my time of need.
God bless ya Trey Taylor!
This is how we serve. This is how we ACT. This is how we model and pay it forward for others. We do it, and don’t crow about it. This guy didn’t need my prompting to take care of someone going through the struggle, and I’m sincerely glad he did the work.
God bless you, ML!