Another warning of similarities to 1929
Securities and Exchange Commissioner Caroline Crenshaw says, “I certainly wouldn’t be alone in analogizing the trend toward deregulation in this current environment to the period immediately prior to the stock market crash in 1929.”
Crenshaw is the only Democrat on the commission and is about to depart as her term expires. An Army reservist and long-time SEC staffer, Crenshaw became a commissioner at the agency in the final months of President Trump’s first administration.
In an interview with Politico Magazine, Crenshaw says:
“We are moving away from financial intermediaries and gatekeepers and the professional standards that keep markets safe.”
“We’re also moving away from transparent markets. We see this, for example, with the stated intent [by the SEC’s new leadership] to move to semiannual reporting, roll back certain disclosures like executive compensation and climate [risk], promote this flow of capital including self-directed retirement accounts into private markets where there’s less consistency, less disclosure, higher fees. We’re retreating from the Administrative Procedure Act and notice and comment rulemaking. All of the processes, all of the information that has been required to be transparent, we are moving away from, and I think that’s a huge problem.”
“We’re reducing corporate accountability. In my view, deterring misconduct is a public good. Corporate actors come into compliance with the rules because failing to do so has costs. But we’re moving away from the deterrence framework: dropping litigations, lower enforcement numbers, lower civil penalties, presidential pardons, allowing mandatory arbitration, meaning no-class action private enforcement of shareholder rights. Our whistleblower cadence has really ground down to almost a halt.”
“We’ve also inhibited our own ability to predict or to respond to market events. We’ve stated we’re going to roll back the amendments and make reductions to what was provided on Form PF [which includes details on certain investment fund advisers’ portfolios]. That’s information that provides systemic risk data to the commission. That’s hugely important as we’re assessing market risk, market crises and how to respond. It’s a huge loss of institutional knowledge as well, given all the staff departures we’ve had. So we’re at a disadvantage in not even just predicting market events, but in responding.”
“These trends embody a sort of chaos that has characterized this past year. The pace has been frenetic. The analysis of our policies has been non-existent, in most cases. And the repercussions, I would argue, are dire.”
“I do think we’re at a moment in history where the influence of money across the board is more worrisome than in many, many, many, many years.”
For more from Crenshaw, here is a speech she gave in May at the Harvard Law School Forum on Corporate Governance.
What can Americans do to protect their financial futures?
Here is a Beginners’ Guide to Asset Allocation, Diversification, and Rebalancing, written by the SEC in 2011.
Here are 5 Tips for Diversifying Your Portfolio, from Investopedia.
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