Patrick McHenryChairman

Washington, November 15, 2016 -

WASHINGTON – Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at today’s full committee hearing with Securities and Exchange Commission (SEC) Chair Mary Jo White:

This morning we welcome Securities and Exchange Commission Chair Mary Jo White.  I will take a little longer due to news that we received last evening that the Chair intends to step down at the end of the Obama Administration.

I do wish to acknowledge, on behalf of all, that Chair White has now completed over two decades of distinguished public service as a U.S. Attorney and as Chair of the Securities and Exchange Commission. She has brought an incredible amount of professionalism to her position. She is known for her independent judgement, which is greatly admired and respected.

I also want to personally thank her for being one of the few witnesses from the administration that has never requested an artificial time limit on her attendance at a hearing. She has always made herself available to this committee and to all subcommittees. She has indeed epitomized what it means to be an accountable agency to Article I of the Constitution, and she is to be commended for that. Also, she has always, always submitted her testimony on a timely basis. If there were cash and valuable prizes we could award you, Madam Chair, for such an accomplishment we would, but I’m sure we would breech a number of ethical and legal considerations by doing so. She has always made her division and office directors available at Capital Markets Subcommittee hearings. Again, the accountability and transparency that she has brought to this office is greatly, greatly admired.

But just in case you’re lulled into a false sense of security, Madam Chair, we still have some concerns, and we still have some disagreements.

It has been almost a year since your last appearance here and there are many subjects we are eager to discuss.

Chief among them is the SEC’s ongoing failure to develop a capital formation agenda.  Notwithstanding two very minor rule changes approved last month, the SEC has done little to promote capital formation since Congress passed the JOBS Act in 2012.

The failure by the SEC stems in part from the Commission’s refusal to act on recommendations made by its Small Business Capital Formation Forum. 

I encourage the SEC to review these recommendations and act on those that will help small businesses to access the capital markets so they can improve, grow and provide economic opportunities for all American workers.

Also languishing at the SEC is the directive passed by Congress requiring the SEC to simplify its disclosure regime.  The FAST Act, which became law nearly a year ago, requires the SEC to eliminate or reduce burdensome, duplicative or outdated disclosures. 

Chair White, I know you’re under enormous pressure from those who are intent on politicizing the SEC’s disclosure regime, but you have an obligation to follow the law and not appease extremists whose ideological objectives have nothing to do with the SEC’s core mission.

In addition, the SEC’s failure to require the electronic delivery of mutual fund documents is disappointing.  How can the SEC force public companies to engage in social, environmental or sustainability disclosures while simultaneously promoting the wasteful use of paper – the cost of which is borne by investors? 

It’s time for the SEC to move into the 21^st century and allow for the e-delivery of mutual fund documents.

Finally, we need to discuss the SEC’s budget request.  As I look at the disturbing national debt clock before me and to my sides, I see no need for the SEC to receive a pre-funded escrow account of more than $290 million for a potential move of its headquarters.  The SEC will have to increase its fees to pre-fund the move, which is nothing less than a tax on capital formation.

Furthermore, claims that the SEC is underfunded are not supported by the facts since the SEC’s budget has increased by a whopping 325 percent since the year 2000—and increase the American people do not enjoy.

Moreover, the SEC’s current budget of $1.605 billion does not account for money in its Reserve Fund, which can include up to $100 million – plus another $25 million in unused funds that carry over from a previous fiscal year.

Finally, Chair White – and this is most important – whenever there is a transfer of power from one presidential administration to another, there is a temptation for federal agencies to rush pending rulemakings to completion, as a way of cementing the policy priorities of the outgoing administration.  But this type of “midnight rulemaking” is neither conducive to sound policy nor consistent with principles of democratic accountability.

As there are currently two vacancies at the Commission, absent an emergency and given your current reputation and legacy, I would strongly urge you to respect the results of last week’s election and resist the temptation to finalize any regulations, including Dodd-Frank Title VII regulations, in deference to the right of the incoming administration to set its own priorities upon taking office in January.

###