The U.S. Senate confirmed the appointment of Paul Atkins as chairman of the Securities and Exchange Commission by a vote of 52-44 on Wednesday. Following a swearing-in ceremony Atkins will soon take control of the securities regulator, much to the jubilation of the asset management industry.
Atkins is a pro-market, pro-crypto choice who is expected to usher in an era of enforcement-lite oversight of the industry — a far cry from the leadership of predecessor Gary Gensler, the former commissioner.
And that distraction might be exactly what the administration needs at this point, and a regulatory overhaul may well provide just that. Since April 2 when Trump introduced his anti-globalist tariff policy that sent the world’s stock markets into an unprecedented freefall, many have questioned if the President knows what he is doing to the U.S. and global economy.
Since the inauguration much of the emphasis has been on tariffs and immigration, with little being done to tackle another campaign promise: the deregulatory agenda.
Acting chair Mark Uyeda has made some baby steps to clarify the direction that the SEC will travel in the coming years — no doubt following candid conversation with Atkins, but without a permanent chair in position there has been an air of uncertainty clouding the regulator. Now that the appointment is confirmed it is likely that Atkins will waste no time in taking action on outstanding issues impacting asset managers and the capital markets, bringing welcome clarity to the industry.
But in addition, Atkins may well be instructed to kickstart the process of deregulation that was promised by Trump and so desired by hardline Republicans and the wider financial sector. And once there are also leaders confirmed at other financial regulators like the FDIC (where Travis Hill remains acting chair), there may well be a concerted effort to remove some of the rules deemed onerous or clunky to anti-regulation naysayers.
And although in an interview late last year Republican SEC Commissioner Hester Peirce suggested that the Commission would remain as ‘the cop on the beat’ and not simply withdraw from its mandate of protecting users of the financial sector; things have not panned out as many expected during the first 100 days of the administration.
Across the board Trump is staying true to his word and taking steps to appease his base, shipping immigrants to El Salvador and imposing sweeping, carelessly prepared tariffs on almost every country in the world. So it remains highly possible that an era of deep deregulation is about to come, and Atkins may be (whether he likes it or not) the one to steer the ship.
It may be the case that this agenda brings some short term respite to a market in turmoil, pushing stock prices up – financial sector stocks in particularly may stand to profit. And that is exactly what Trump needs right now to distract attention from what is by many accounts the worst performing stock market of any modern-day president’s opening tenure.
And the markets will rejoice. And everyone’s 401(k)s will shoot back up, and all will be well in the world. But the market and market participants would do well to remember 2008, and to remind themselves why Dodd-Frank exists in the first place and why it has such sweeping regulatory oversight of the entire industry. They won’t, but they should.
Systematically removing the rules and measures to ensure safety and soundness that has been baked into the U.S. financial system over the last 17 years since the global financial crisis — just for the sake of reinvigorating the markets — may not end well and should not be encouraged.
Opinion pieces represent the views of their authors and do not necessarily reflect the views of Institutional Investor.
