Staff At Biden’s Top Financial Regulator Keep Quitting. Republicans Want To Know Why.
As staff at the Securities and Exchange Commission depart at elevated levels amid a surge in rulemaking, Republican lawmakers are pressing SEC Chair Gary Gensler for an explanation.
Under the Biden administration, the regulatory agency is pursuing new rule changes at a much faster pace than in past years, with a proposal to force climate disclosures among the most controversial. A private letter to Gensler from six Republicans on the Senate Banking Committee claims that he has adopted an overly antagonistic posture toward the financial industry.
The letter, dated Oct. 27, concludes that “efforts to ram through hurried rulemaking without proper analysis, deliberation or consideration of downstream negative impacts is nothing short of regulatory malpractice,” according to a report from Reuters, which obtained a copy of the letter.
The Republicans asked Gensler to explain how he would respond to their concerns.
Roughly 20.8% of employees in senior positions departed the agency in the last fiscal year, marking the highest attrition in nearly a decade, according to a report from the SEC’s Office of Inspector General published earlier this month. Turnover reached 8.4% among attorneys and 7.0% among economists. The document cited “stiff competition from the private sector as increased wages and workforce engagement make private sector positions attractive to both new and seasoned professionals.”
The SEC takes significantly longer than the private sector to hire new workers, according to the report. An audit of the agency’s hiring process found that almost half of the analyzed hiring actions took more than 100 business days to complete, which is more than twice the average in the private sector. Beyond new advertising and branding campaigns, the SEC suggested that robust internal employee development could reduce attrition.
President Joe Biden is pursuing a “whole-of-government approach to put climate change at the center of our domestic, national security, and foreign policy,” according to a speech he delivered days after his inauguration. Among other proposals, the SEC has suggested forcing companies to report the material impact climate change presents to operations, the impact of “climate-related events” such as severe weather on transaction activities, and risk management processes used to mitigate climate risk.
However, a survey conducted by CNBC shows that 55% of financial managers are opposed to the rule, while 35% are “strongly” opposed. Within the sample of 21 executives were multiple chief financial officers at Fortune 500 companies.
Other agencies have similarly been pursuing increased climate scrutiny of the private sector. The Treasury Department’s Office of the Comptroller of the Currency recently announced that Yue Chen would serve as chief climate risk officer, leading environmental risk efforts related to “supervision, policy, and external engagement.”
The Federal Reserve, which is separate from the federal government and charged with ensuring monetary stability, plans to work alongside the Office of the Comptroller of the Currency to “provide guidance to large banks on how we expect them to identify, measure, monitor, and manage the financial risks of climate change,” according to a speech delivered by Federal Reserve Board of Governors member and Vice Chair for Supervision Michael Barr.
“As our nation, and the world, grapple with how to respond to climate change, banks are increasingly focused on the risks that climate change brings to their balance sheets,” Barr said. “The Federal Reserve is working to understand how climate change may pose risks to individual banks and to the financial system. The Federal Reserve’s mandate in this area is important, but narrow, focused on our supervisory responsibilities and our role in promoting a safe and stable financial system.”
