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Happy New Year. 2022 was an extraordinary year. Our accomplishments and impact were many and touched all the power centers of Washington from Congress and the White House to the regulatory agencies and the media. Whether it was pushing regulators to use their power to protect Main Street families, elevating the voice of retail investors, raising the profile of crucial issues like racial economic inequality, or exposing Washington’s revolving door, Better Markets has been an essential and unique counterweight to Wall Street. We do that because we want an economy that works for all Americans and a financial system that supports the productive economy, jobs, small businesses, community banks, Main Street investors, and ultimately generates broad based wealth and rising standards of living.
In just the next several weeks we will be releasing reports evaluating the SEC’s performance, examining how the Federal Reserve’s policies impact risk in our financial system, and how we can improve big bank oversight and enforcement.
And in the coming months we’ll be weighing in on significant SEC proposals that could potentially take crucial steps making markets more fair for retail and Main Street investors. Our new Director of Derivatives Policy, Cantrell Dumas, will also shed light on the underreported commodities markets that impact prices working families pay for essential products, from cereal and bread to gas to children’s toys.
To do this—to stand up to the most powerful interests in the country—requires us to be independent and that requires us to get support from everyday Americans like you. That’s why we turned down FTX’s offer last April of $1 million or more to support its radical and dangerous proposal at the CFTC to eliminate investor, customer and financial stability protections. That and none of our work would be possible without our generous supporters and, if you aren’t one already, we hope you’ll consider supporting us. For those of you who are, thank you for allowing us to continue to fight for you and an economy and financial system that supports you, your family, your jobs, savings, investments and future.
Director of Strategic Partnerships and Development at Better Markets
From TV, radio, and print — Better Markets’ views on all matters related to finance and the economy have been sought after and featured in major news outlets. Here are our top hits from December 2022.
Washington Needs a Crypto Rethink
“The C.F.T.C. has been chronically underfunded, and it is easily penetrated and captured by an industry it is supposed to regulate. FTX and other crypto firms wanted the weakest possible regulator, and that’s the C.F.T.C.”
We need to talk about the CFTC
“. . . Rather than aggressively regulating crypto and skeptically scrutinizing its claims, the CFTC has spent most of its time cheerleading the industry and trying to expand its jurisdiction rather than worrying about investor, customer, and markets protections.”
New Report: Protecting Our Economy by Strengthening the U.S. Banking System Through Higher Capital Requirements
Our new report discusses why capital requirements must be increased, the baselessness of industry talking points, and two key aspects in which the capital framework must be strengthened.
IN CASE YOU MISSED IT
Expert Analysis in Law 360: SEC Must Improve Enforcement Quality with 3 Key Factors
By Stephen Hall, Legal Director and Securities Specialist
Houston Shaner, Senior Counsel
Joint Op-Ed with American Bankers Association: FTX Crash Shows Cryptocurrency Market Needs Bank-Like Regulation
By Dennis Kelleher, Cofounder, President and CEO
Rob Nichols, American Bankers Association President and CEO
ACTIVITIES AT THE REGULATORY AGENCIES
The SEC voted to propose a set of reforms that can benefit investors by improving the way securities trades are routed and executed.
This proposal is part of a worthwhile regulatory effort to create a more durable solution to the lack of transparency and the risk of instability associated with the U.S. Treasury markets, so that dramatic interventions in moments of crisis—such as those we witnessed in March 2020—are no longer necessary.
ACTIVITIES AT THE FEDERAL COURTS
Each month our legal team outlines some of the top cases we’re keeping an eye on, the Amicus “Friend of the Court” Briefs we have filed, and why everyone with a bank account, credit card, mortgage loan, or retirement loan should be interested in those cases.
The end of the year is always a busy time on Capitol Hill as lawmakers rush to finish up their legislative business and rush home for the holidays. This year was no different as Congress needed to pass an end of year spending bill as well as hold several important hearings from agency oversight to the fallout of the FTX collapse.
FTX and Crypto Hearings:
Both the House Financial Services Committee and the Senate Banking Committee held hearings on the FTX collapse on back-to-back days. The first hearing in the House had a single witness, John Ray III, the current CEO of FTX who took over from Sam Bankman-Fried as FTX was put into bankruptcy. This hearing was originally scheduled to hear from Bankman-Fried himself, but Bankman-Fried was arrested by Bahaman authorities the night before. While John Ray’s work is still in the early stages, many questions focused on the depth and extent of the fraudulent activities that happened at FTX and led to the bankruptcy.
The Senate Banking Committee witness list included American University Professor Hilary Allen, author Ben McKenzie, Cato’s Jennifer Schulp, and former FTX paid spokesperson and investor Kevin O’Leary. Chairman Brown and a number of other members focused their remarks and questions on the many harms that crypto has inflicted on too many Americans, including consumer scams and the need for regulators to crack down on crypto crooks. Remarkably, even after all that happened in the crypto collapse and carnage in 2022, there were still a fair number of crypto-friendly Members on both Committees who mainly argued that the fraud at FTX wasn’t reflective of the broader crypto industry. The facts from 2022, of course, showed otherwise.
Both Committees promised these hearing would be just the first in a series on FTX and the larger crypto industry. With a divided Congress incoming as well as more details of Bankman-Fried’s and FTX’s criminal activity coming to light, these discussions and hearings will remain top of mind to lawmakers on both sides of the aisle. Better Markets will continue—as it has throughout 2022—to fight for customer, investor and financial stability protections to be prioritized over the short-term profits and bonuses of too many in a fundamentally lawless industry.
Consumer Financial Protection Bureau Oversight Hearings:
Both the House and Senate also held their mandated semi-annual oversight hearings of the CFPB with Director Rohit Chopra testifying in front of both Committees. Democrats in both chambers praised the CFPB for their work in protecting consumers and highlighting the CFPB’s work in fighting back against big banks, pushing back against redlining and housing discrimination, highlighting the relief the agency has given harmed customers, and importantly defending the funding structure of the agency. Republican Members remained hostile towards the agency, with the incoming House Chairman, Patrick McHenry, promising to increase his Congressional oversight of the agency. This is fundamentally a fight over priorities: protect financial consumers or financial firms’ profits. For us and Director Chopra, this is an easy decision. These hearings highlighted many of the upcoming battles and differences that will surface in the divided 118th Congress.
2023 Government Spending and Budget Increases for Cops on the Wall St Beat
At the end of the 117th Congress both Chambers approved a $1.7 trillion spending package known as the omnibus to fund the government through September 2023. This was a critically important bill to ensure that the government would not shut down in the early stages of the newly divided Congress in 2023. Importantly, included in the omnibus is an 8% increase in funding for the SEC, bringing their funding from $1.99 billion to $2.15 billion for the balance of the fiscal year. SEC Chair Gensler has repeatedly asked for more resources for the agency to increase its ability to police Wall Street, protect investors, rein in crypto firms, and increase their ability to take on the financial industry with vast resources. The CFTC’s funding also increased from $332 million to $365 million in 2023. As we have emphasized and called for, it’s critical that these agencies are properly funded to continue to do their jobs effectively.
WHAT WE’RE READING
Relief rally faces big tests
Financial Times, December 2, 2022
Ordinary Investors Who Jumped Into Crypto Are Saying: Now What?
The New York Times, December 5, 2022
The New Yorker, December 16, 2022
Financial Times, January 2, 2023