There is a myth being pushed by the business media that any living regulator was ever tough on Wall Street.  It simply didn’t occur.

The latest to be awarded the title of tough financial regulator is President-Elect Biden’s choice for the SEC chair Gary Gensler.

And what did Mr. Gensler do to get this title?

According to the Wall Street Journal,

when he ran the Commodity Futures Trading Commission, a smaller regulatory sibling to the SEC, from 2009 to 2013…. he steamrolled the opposition to write rules from scratch governing the markets for hundreds of trillions of dollars of derivatives. Some of these complex financial instruments were blamed for the 2008-09 financial crisis.

As regular readers know, derivatives typically have two forms of opacity.  First, they are structured to be opaque so buyers and sellers don’t have the information they need to know what they own.  Second, their ownership is opaque.  In 2008, this opacity was the foundation for fears of contagion (one bank fails and brings down the rest) and the need to bail out Wall Street.

Did Mr. Gensler’s rules bring transparency to derivatives so buyers and sellers always have the information they need to know what they own?

No!

Did Mr. Gensler’s rules bring transparency to the ownership of derivatives and put an end to the fear of contagion?

No!

Did Mr. Gensler’s rules reduce the amount of derivatives outstanding?

No!  The market for derivatives is actually several times larger now.

It is possible Mr. Gensler was the toughest financial regulator in the Obama Administration.  This however is an incredibly low bar to get over since the Administration was dedicated to the proposition of saving Wall Street and not doing anything that would restrain its ability to make money.