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SEC Chair Gensler Warns of 'Significant' Effects of US Default on Investors and Markets

US House Committee Demands Answers from SEC Chair Gensler

Inadequate Responses Prompt Ultimatum for SEC Chair

Committee Considers Subpoena to Compel Response from SEC

SEC Chair Highlights Potential Impact of US Default on Investors and Markets

The US House Committee on Financial Services has given a strict deadline to Gary Gensler, the head of the Securities and Exchange Commission (SEC), to answer their questions. The committee believes that the SEC has not given satisfactory responses about its work.


In a letter dated May 9, the lawmakers specifically requested internal non-public documents related to various matters, including the SEC's charges against Sam Bankman-Fried, the founder of bankrupt FTX, crypto regulations, and company climate disclosures. The committee also asked for a list of all digital asset entities that have attempted to register with the SEC, along with any relevant communications and documents related to the process.


Expressing their dissatisfaction, the committee criticized Gensler and the SEC staff for the insufficient responses received thus far. The committee noted that the SEC had provided voluminous documents consisting mostly of publicly available information.


The letter from the committee set a deadline of May 19 for the SEC to provide the requested documents. Failure to comply would result in the invitation of the SEC's General Counsel and the director of the Legislative Affairs Office for questioning.


Congressman Bill Huizenga, speaking about the SEC's inadequate responses, stated that lawmakers were tired of the SEC's "stonewalling." Huizenga emphasized the importance of congressional oversight and pledged to ensure that someone from Gensler's staff would answer the committee's questions if the chair himself failed to do so.


This latest ultimatum is part of the ongoing efforts by the House Committee to gain a better understanding of the SEC's operations under Chair Gensler. Despite sending previous letters and conducting hearings, the committee has not received clear regulations for the crypto industry. As a result, some committee members are now considering using a subpoena to force the Commission to provide a response.


SEC Chair Warns of "Significant" and "Lasting Effects" of US Default


Gary Gensler, the chairman of the Securities and Exchange Commission (SEC), has issued a warning about the potential consequences of a U.S. Treasury default on its debt obligations. Gensler emphasized that such a default would have significant and unpredictable effects on investors, issuers, and markets.


During his remarks at the International Swaps and Derivatives Association annual meeting, Gensler expressed concern about the ongoing discussions in Congress regarding the debt ceiling. He highlighted the potential impact of a U.S. default on capital markets, comparing it to a tumultuous roller coaster ride.


Although the SEC does not have a direct role in these discussions, Gensler emphasized that the outcome would significantly affect the SEC's mission, which includes protecting investors, facilitating capital formation, and maintaining fair and efficient markets.


Gensler pointed out that the pricing and liquidity of short-dated Treasury bills have already been affected, and the SEC is closely monitoring the situation for any further disturbances.


The U.S. Treasury Secretary, Janet Yellen, recently warned that the Treasury Department might not be able to meet all of the government's financial obligations by June 1 if the debt limit is not raised or suspended by Congress. Yellen also emphasized the catastrophic consequences of a U.S. default on its debt.


As discussions surrounding the U.S. debt ceiling continue, it remains to be seen how these issues will be resolved and what impact they will have on the financial markets.

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