Wall Street is set to learn how tough Joe Biden’s watchdogs will be


Gensler, 63, is well known on Wall Street after leading the Commodity Futures Trading Commission during the Obama administration and making a fortune decades earlier at Goldman Sachs Group Inc. Chopra, a 39-year-old Federal Trade Commission member who helped Senator Elizabeth Warren set up the CFPB, would run an agency that Democrats want reinvigorated to protect consumers from abuses involving credit cards, mortgages and high-interest loans. Republicans would prefer it remain in the slumber that defined the bureau in the Trump era.

“There remains a sharp divide between Republicans and Democrats on the role of the CFPB in financial regulation,” said Andrew Olmem, National Economic Council deputy director in the Trump administration who is now a partner at the Mayer Brown law firm. “This is a very important nomination because a new director can significantly shift the direction of the CFPB.”

What follows is a breakdown of policy topics that Gensler and Chopra will confront at the hearing—and, if confirmed, in their jobs:

Retail investors

The popularity of commission-free trading—spearheaded by Robinhood—has forced regulators to grapple with new questions. Top among them is “gamification” and the proliferation of apps that make investing fun but that critics claim inappropriately hook consumers with nudges and prompts to keep them trading. Determining whether and how to respond is something Gensler will have to grapple with. The issue could also fall under the purview of Chopra and the CFPB.

The GameStop frenzy has prompted additional regulatory concerns, including whether unsophisticated investors should be able to so freely engage in risky trading involving options. Bubbles, too, will be on senators’ minds. A number think the SEC should do something about the eye-popping rise of unregulated Bitcoin and other cryptocurrencies. Another potential target is special purpose acquisition companies, or SPACS, which are essentially corporate shells that issue shares before investors even know what their money is being used for.

Market structure

The GameStop saga has made lawmakers wake up to the inner-workings of the stock market. Practices like off-exchange trading and Robinhood and other brokers selling their customers’ orders to so-called market makers like Citadel Securities are getting unprecedented attention on Capitol Hill.

Short-selling has also come under fire after it emerged that hedge funds making bearish bets had borrowed more than 100% of GameStop’s outstanding shares. In the face of all that complexity, lawmakers will want to know how Gensler plans to ensure that markets are fair for average Americans.

Private equity

Among the Banking Committee Democrats who have most relished going after private equity are Chairman Sherrod Brown of Ohio and Warren of Massachusetts.

Warren introduced the “Stop Wall Street Looting Act” in 2019 calling for new rules for buyout firms, and she made the industry’s treatment…

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