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It’s bad enough that our political class never lets a good crisis go to waste in pursuing harebrained policies that sound good on paper but usually fail in practice (ObamaCare). It’s another thing to make the crisis — in this case soaring energy prices and rampant inflation — worse. Yet Gary Gensler aims to do just that.
You might be wondering why a guy whose main job is supposed to be protecting investors from pump-and-dump schemes and the like is wading into our energy woes. But Gensler’s tenure as chair of the Securities and Exchange Commission has been filled with odd edicts and windmill-tilting excursions that seem far removed from the commission’s core responsibilities.
No help for little guy
For example, as this column has pointed out, Gensler seems prepared to upend the structure of the stock market even though trading for average investors has never be easier or cheaper; he seems to think some hedge funds are robbing the little guy without much in the way of proof.
But if Gensler gets his way, he won’t be protecting the little guy. According to one of the new proposals, it’ll be large sophisticated investors putting money in private equity who somehow need protection through heightened disclosures and other needless rules.
It’s another non-solution in search of a non-scandal for personal gain, I am told.
Gensler’s proposals are likely designed to build up his street cred with his real boss — not Joe Biden, but the private-equity-hating progressive Massachusetts Sen. Elizabeth Warren who has de-facto veto power over major Biden appointments.
Gensler has it made it clear around DC that his next stop after the SEC should be Treasury secretary, and he needs Warren in his corner to make this happen.
This week things might get even stranger in Genslerland as the SEC chief looks to further solidify his relationship with Warren, I’m told. I say stranger because the last thing US consumers need is more ESG — environmental social governance — edicts that have the effect of reducing exploration as oil and gas prices soar due to sanctions on Russia over its invasion of Ukraine.
Wall Street executives who are tracking Gensler’s work say they expect to be hit with proposed new disclosure requirements for public companies and asset managers in relation to ESG goals.
The move comes about a year after Gensler and his task force began “studying” the alleged need for companies to tell investors how they are looking to make the world a better, more woke place — as opposed to merely employing people and serving investors.
Wall Street is bracing for Gensler to start demanding that every public company provide detailed accounts about how they are looking to reduce their carbon footprints, seek and hire diverse candidates for board seats and lots of other ESG stuff that will make Elizabeth Warren, Bernie Sanders and AOC swoon.
Asset managers will likely face the same types of disclosures for how they’re allocating capital to green projects that meet ESG standards, these people tell me.
If you think all of this is a bit tone-deaf given what’s going on in the world these days, you’re not alone.
Before the sanctions, Wall Street invested in Russian oil and gas because it’s a sure money maker. These Russian companies are often hidden from the public (and ESG guidelines) as seemingly conventional emerging market investments when they’re not. Meanwhile, if investors want to follow ESG guidelines, they are constrained from putting money into US oil producers.
It’s the same ridiculous double standard that means that yes, even as we boycott Russia, the US is forced to buy oil from other unsavory nations (our friends in Venezuela) to prevent gas from going above $8 a gallon to make up for declining domestic production.
And all that was before the SEC and Gensler further solidify ESG mandates into corporate law through new disclosures and possibly more. Warren will, of course, cheer him on; the American people, who are paying through the nose for energy, not so much.
Citigroup’s headache
Citigroup’s messy relationship with Russia is also likely to be costly.
The US bank has the largest exposure to Russia of all the big US banks, close to $10 billion, filings indicate.
Since at least last year, the bank was looking to sell its Russia unit, possibly over concern that doing business in the land of Putin would make it impossible to engage in virtue signaling about just how bad it is to live in the US as many companies like to do these days to gain brownie points with lefties in Washington.
Putin’s invasion of Ukraine, and his killing of innocent civilians, and the sanctions that were triggered, has made the sale next to impossible; western buyers don’t seem to be interested. Maybe a Chinese bank run by China’s oppressive Communist Party will step in, but the optics of that aren’t appealing.
In the meantime, analysts are debating the financial hit Citi will take as its Russian assets deteriorate.
Dick Bove of Odeon Capital tells Eleanor Terrett of Fox Business that Citi could lose at least $1 billion on Russia, but “that is spit relative to the size of the company’s balance sheet.”
True, but it should loom more significantly the next time Citigroup joins the virtue-signaling crowd about the evils of America.
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