(Reuters) — U.S. Securities and Exchange Commission Chairman Gary Gensler defended his agency’s push to include climate risks in public company disclosures before the U.S. Senate Banking Committee on Thursday.
Mr. Gensler appeared before the panel for its regular oversight duties, but the hearing comes at a time of Republican frustration with his agenda. They claim he has overstepped his authority with a broad assault on US capital markets and taken a hostile stance against the financial industry.
But in prepared testimony released ahead of the hearing, Gensler insisted his new rules are critical to ensuring U.S. capital markets remain the global “gold standard.”;
Democratic Senator Sherrod Brown of Ohio applauded Gensler’s ambitious agenda. “If Wall Street and its allies are complaining, it probably means you’re doing your job,” he said.
Republicans are particularly concerned about a draft SEC rule that would require public companies to disclose climate-related risks, including greenhouse gas emissions. Business groups say it is burdensome and exceeds the agency’s powers.
“The cost of compliance will be more material to the investor than the information itself,” the committee’s top Republican, Sen. Pat Toomey of Pennsylvania, said in opening remarks.
He also warned that the SEC should be “nervous” about legal challenges in light of a recent Supreme Court decision to limit the EPA’s power, which some legal experts say undermines the SEC’s authority over its climate rule.
Jon Tester, a Democratic senator from Montana, raised concerns about the climate rule’s potential impact on small business owners like farmers who could be snared by its requirement for public companies to disclose emissions in their supply chains.
But Gensler said in his testimony that the rule would provide needed clarity and consistency to an issue important to investors that is disclosed by some companies under different frameworks, and later added that the agency was considering all feedback.
Republicans also pressed Gensler on what they see as his increasingly hawkish stance on cryptocurrency oversight.
Mr. Gensler made headlines last week when he said that crypto companies may need multiple SEC registrations and to split their operations into separate legal entities.
He said such a “unbundling” could improve investor protection and guard against conflicts of interest. He added that SEC staff were working with traditional market intermediaries interested in entering the crypto market and urged Congress not to inadvertently undermine existing investor protections while crafting cryptocurrency legislation.
However, Toomey said the SEC has failed to provide regulatory clarity in the crypto market and accused the SEC of being asleep at the wheel when crypto lending platforms Celsius Network and Voyager Digital collapsed this summer, leaving thousands of retail customers unable to access. their assets.
Mr. Gensler also struck a cautious note on a recent agreement between U.S. and Chinese officials on auditing U.S.-listed Chinese companies, noting that the deal only makes sense if U.S. officials are actually allowed to fully investigate Chinese auditors.
If not, roughly 200 companies would still face the prospect of U.S. trade restrictions, he warned.