Sen. Elizabeth Warren, the 2020 presidential candidate and frequent Wall Street critic, is asking the heads of two industry regulators for more details about the effects of a lengthy government shutdown on their enforcement capabilities.
Millions of Americans trust the Securities and Exchange Commission to “protect their retirement funds, pension plans, college savings and other investments,” Warren, D-Mass., said in a letter Thursday to Chairman Jay Clayton. “It is important that I fully understand the difficulties facing the SEC.”
The agency, which polices U.S. stock markets, and the Commodity Futures Trading Commission, which monitors markets in raw materials from wheat and corn to gold, have been operating in a limited capacity since the partial closure took effect in late December.
Now the longest in U.S. history, the shutdown began when President Trump refused to sign any funding bill that didn’t include $5.7 billion for a wall he promised to build along the southern U.S. border.
Hampered government operations have since been shaving an estimated $1.2 billion a week from economic growth while halting reviews of new medicines, corporate mergers and stock offerings. The standoff between Trump and congressional Democrats refusing his demands also prompted House Speaker Nancy Pelosi, D-Calif., to temporarily block the president’s planned State of the Union address later this month.
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With some economists warning that the shutdown increasingly poses a recession risk, the SEC’s role in regulating markets is becoming even more crucial, said Warren, who asked for statistics including the number of investigations begun and settled since the closure began and the number of corporate filings reviewed.
She sought similar information from the CFTC, noting in a letter to Chairman J. Christopher Giancarlo that his agency has “seen its tools stripped since the shutdown began.”
While the Federal Reserve doesn’t rely on congressional appropriations for its funding, Warren wrote a separate letter to Chairman Jay Powell asking how the lack of economic data normally supplied by shuttered agencies will affect the central bank’s ability to set monetary policy.
The Fed has raised short-term interest rates nine times, to a range of 2.25 percent to 2.5 percent, since cutting them to nearly zero during the financial crisis.
With slowing economic growth worldwide and mounting fallout from tariffs on $250 billion in Chinese imports that Trump imposed in a trade dispute with Beijing, however, the central bank indicated it would monitor such data closely this year before further rate decisions. The Fed is tasked under U.S. law with the dual responsibilities of fostering stable economic growth and maximum employment.
“As the shutdown continues, you will likely face increased difficulty in making informed decisions that will have a major impact on the American economy,” Warren told Powell, especially given a potentially vital meeting of the central bank’s monetary policy committee at the end of this month.
“Given the importance that the Fed plays in the lives of all Americans, I want to better understand the impact of the shutdown on the Fed’s operation’s moving forward,” the senator wrote.
