In a speech last week at The Brookings Institute, SEC Commissioner Caroline Crenshaw didn’t pull any punches when it came to expressing her dismay about the agency’s current direction. Here’s an excerpt:

Unfortunately, recently, my voice has become one of ubiquitous dissent. It has been unsettling to see how precipitously one Commission is willing to undo the work of the Commission that came before it—all without a single notice-and-comment rulemaking to date. I’m concerned that the fundamental precepts upon which our markets have been built—tenets that have, by and large, kept our markets safe for both issuers and investors alike—are being eroded.

I fear that the very core of our intricate market structure is under attack. And instead of safeguarding our markets for investors to fund their retirements in safe and sustainable ways, we are moving in a direction where markets start to look like casinos. The problem with casinos, of course, is that in the long run the house always wins.

I think Commissioner Crenshaw raises some valid concerns about the potential downsides of the current SEC’s swashbuckling approach to regulatory initiatives. That being said, she doesn’t exhibit a lot of self-awareness about how things have gotten to this point. Commissioner Crenshaw may bemoan her current status as a dissenter, but she was solidly in the majority when the SEC under Chair Gensler rammed through an unprecedentedly burdensome regulatory agenda that prioritized the views of activists and advocacy groups & paid little attention to the issuer community, while simultaneously carrying out an enforcement program that was long on novelty and sometimes short on fairness.

If you keep that recent history in mind, it’s not surprising that the SEC has moved quickly and aggressively in the opposite direction. After all, “elections have consequences, yada, yada, yada. . .” and the agency’s likely agenda under Trump 2.0 was pretty plain for everyone to see.  Still, financial regulation is too important to be as politicized as it has become, so I don’t think it’s in anyone’s interest to continue to engage in a regulatory tit-for-tat with each change in administrations.

Unfortunately, my guess is that this kind of tit-for-tat is likely to continue at the SEC for the foreseeable future.  As I’ve said before, I think much of the problem stems from legislative gridlock and its effect on how the party in power uses federal agencies to further its agenda. When you factor the likelihood of the SCOTUS overturning Humphrey’s Executor and President Trump’s apparent unwillingness to fill Democratic vacancies on the SEC into the equation, the ideal of the SEC as a relatively non-partisan financial regulator seems even more like a pipe dream.

– John Jenkins