Business briefs
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SEC Chair
Gary Gensler
to step down
Securities and Exchange Commission Chair Gary Gensler, who was aggressive in his oversight of cryptocurrencies and other financial markets, will step down from his post on Jan. 20.
Gensler pushed changes that he said protected investors, but the industry and many Republicans bristled at what they saw as overreach.
President-elect Donald Trump had promised during his campaign that he would remove Gensler. But Gensler on Thursday announced that he would be stepping down from his post on the day that Trump is inaugurated.
Bitcoin has jumped 40% since Trump’s victory. It hit new highs Thursday and was nearing $100,000. Bitcoin moved notably higher still after Gensler’s resignation was announced.
Gensler’s stance on the rise of cryptocurrencies was captured during a speech he gave during the first year of his chairmanship in 2021 where he described the market as “the Wild West.”
“This asset class is rife with fraud, scams, and abuse in certain applications,” he said in a speech at the Aspen Security Forum. “There’s a great deal of hype and spin about how crypto assets work. In many cases, investors aren’t able to get rigorous, balanced, and complete information.”
Under Gensler, the SEC brought actions against players in the crypto industry for fraud, wash trading and other violations, including as recently as last month when the commission brought fraud charges against three companies purporting to be market makers, along with nine individuals for trying to manipulate various crypto markets.
Yet access to cryptocurrencies became more widespread under Gensler. In January, the SEC approved exchange-traded funds that track the spot price of bitcoin. With such ETFs, investors could get easier access to bitcoin without the huge overlays required to buy it directly.
Gensler, however, acknowledged the SEC had denied earlier, similar applications for such ETFs, including Grayscale Bitcoin Trust, among the first to eventually be approved by the SEC.
“Circumstances, however, have changed,” Gensler said, pointing to a ruling by the U.S. Court of Appeals for the District of Columbia that said the SEC failed to adequately explain its reasoning in rejecting Grayscale’s proposal.
Even there, Gensler made sure not to endorse the merits of bitcoin. He pointed to how ETFs that hold precious metals are tracking prices of things that have “consumer and industrial users, while in contrast bitcoin is primarily a speculative, volatile asset that’s also used for illicit activity including ransomware, money laundering, sanction evasion, and terrorist financing.”
Gensler was tested early in his tenure with the rise of the meme stock phenomenon that shocked the financial system in early 2021. Earlier this year, the SEC under Gensler pushed Wall Street to speed up how long it takes for trades of stocks to settle, one of the areas where the commission’s staff recommended changes following the reckoning created by GameStop, one of the first meme stocks.
In the depths of the COVID-19 pandemic, hordes of smaller-pocketed and novice investors suddenly piled into the stock of the struggling video-game retailer. During the height of the frenzy, several brokerages barred customers from buying GameStop after the clearinghouse that settles their trades demanded more cash to cover the increased risk created by its highly volatile price.
In May 2024, new rules meant broker-dealers have to fully settle their trades within one business day of the trade date, down from the previous two.
Critics of the SEC under Gensler have called many of the agency’s proposals overly burdensome.
The investment industry, for example, is pushing against a proposal to force some advisers and companies disclose more about their environmental, social and governance practices, otherwise known as ESG. Critics say the proposal is overly complex and increases the risk of investor confusion, while imposing unnecessary burdens and costs on funds.
On Thursday, Gensler stood by the SEC’s track record under his direction.
“The staff and the Commission are deeply mission-driven, focused on protecting investors, facilitating capital formation, and ensuring that the markets work for investors and issuers alike,” Gensler said in prepared remarks. “The staff comprises true public servants.”
Gensler previously served as Chair of the U.S. Commodity Futures Trading Commission, leading the Obama Administration’s reform of the $400 trillion swaps market. He also was senior advisor to U.S. Senator Paul Sarbanes in writing the Sarbanes-Oxley Act (2002) and was undersecretary of the Treasury for Domestic Finance and assistant secretary of the Treasury from 1997-2001.
Boar’s Head
listeria outbreak is over with 10 dead
A deadly outbreak of listeria food poisoning tied to a massive recall of popular Boar’s Head deli meats is over, federal health officials said Thursday.
Ten people died and 61 were sickened in 19 states after eating listeria-contaminated Boar’s Head products, including liverwurst. Illnesses were reported between late May and mid-September, according to the U.S. Centers for Disease Control and Prevention.
Listeria outbreaks are considered over 60 days after the last reported illness, according to the CDC. In addition, deli products linked to the outbreak are now past their shelf life.
After recalling more than 7 million pounds of Boar’s Head deli meats distributed nationwide, company officials shut down a production plant in Jarratt, Virginia, and permanently stopped making liverwurst.
Boar’s Head faces continued scrutiny over dozens of reports of problems at the factory, including mold, insects, dripping water and contaminated walls, floors and equipment.
The U.S. Agriculture Department is conducting an internal investigation into whether federal investigators and Virginia state inspectors responded to the reports of serious problems. U.S. Sen. Richard Blumenthal, who requested the investigation, has received no update on the findings, his staff said.
The company also faces dozens of lawsuits filed by people who were sickened or their families.
Officials with USDA’s Food Safety and Inspection Service have refused to share documents regarding the agency’s inspections and enforcement at the plant, plus inspection reports from eight other company factories across the country. The AP is appealing the public records request denial.
Average rate
on a 30-year mortgage rises
The average rate on a 30-year mortgage in the U.S. edged closer to 7% this week, climbing to its highest level since July.
The rate rose to 6.84% from 6.78% last week, mortgage buyer Freddie Mac said Thursday. That’s still down from a year ago, when the rate averaged 7.29%.
Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners seeking to refinance their home loan to a lower rate, also ticked up this week. The average rate rose to 6.02% from 5.99% last week. A year ago, it averaged 6.67%, Freddie Mac said.
When mortgage rates increase they can add hundreds of dollars a month in costs for borrowers, reducing homebuyers’ purchasing power at a time when home prices remain near all-time highs, even though U.S. home sales are on track for their worst year since 1995.
The average rate on a 30-year mortgage fell to a two-year low of 6.08% in late September but it’s been mostly rising since then, echoing moves in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
The yield, which has mostly hovered around 4.4% since last week and was below 3.70% in September, has been rising in recent weeks following mixed reports on inflation and the economy. It also surged after the presidential election, reflecting expectations among investors that President-elect Donald Trump’s proposed economic policies may widen the federal deficit and crank up inflation.
Mortgage rates slid to just above 6% in September following the Federal Reserve’s decision to cut its main interest rate for the first time in more than four years. While the central bank doesn’t set mortgage rates, its actions and the trajectory of inflation influence the moves in the 10-year Treasury yield. The central bank’s policy pivot is expected to eventually clear a path for mortgage rates to generally go lower. But that could change if the next administration’s policies send inflation into overdrive again.
September’s pullback in mortgage rates helped drive a pickup in sales of previously occupied U.S. homes last month. However, the recent climb in rates has put a damper on the housing market in the near term, said Hannah Jones, senior economic research analyst at Realtor.com.
“Mortgage rates reached the high-6% range in late October, and have remained elevated since, much to the disappointment of buyers hoping to find some relief in the late-fall housing market,” she said.
Forecasting the trajectory of mortgage rates is difficult, given that rates are influenced by many factors, from government spending and the economy, to geopolitical tensions and stock and bond market gyrations.
Economists predict that mortgage rates will remain volatile this year, but generally forecast them to hover around 6% in 2025.
U.S. applications
for jobless benefits fall to 213,000
The number of Americans applying for unemployment benefits fell again last week, remaining near seven-month lows.
The Labor Department reported Thursday that jobless claim applications fell by 6,000 to 213,000 for the week of Nov. 16. That’s fewer than the 220,000 analysts forecast.
However, continuing claims, the total number of Americans collecting jobless benefits, rose by 36,000 to 1.91 million for the week of Nov. 9. That was higher than expected and the most in three years.
While the number of new people applying for jobless aid each week remains at historically healthy levels, some who are receiving benefits are finding it harder to land new jobs. That suggests that demand for workers is waning, even as the economy remains strong.
The four-week average of weekly claims, which quiets some of the weekly volatility, fell by 3,750 to 217,750.
Weekly applications for jobless benefits are considered a proxy for U.S. layoffs.
In response to some weakening employment data and receding consumer prices, the Federal Reserve slashed its benchmark interest rate in September by a half a percentage point and by another quarter-point earlier this month.
In September, Fed officials predicted that they would reduce their benchmark rate four times next year, on top of three rate cuts this year, but that outlook has changed quickly.
Several surprisingly strong economic reports, combined with President-elect Donald Trump’s policy proposals, have led to a decidedly more cautious tone from the Fed that could mean fewer cuts and higher interest rates than had been expected.
The central bank recently shifted its focus from taming inflation toward supporting the job market as it tries to execute a rare “soft landing,” whereby it brings down inflation without spurring a recession.
The half-point rate cut in September was the Fed’s first rate cut in four years after a series of increases starting in 2022 that pushed the federal funds rate to a two-decade high of 5.3%.
Despite a slight uptick in October, inflation has retreated steadily the past two years, approaching the Fed’s 2% target and leading Chair Jerome Powell to declare recently that it was largely under control.
The government reported in late October that an inflation gauge closely watched by the Fed fell to its lowest level in three-and-a-half years.
During the first four months of 2024, applications for jobless benefits averaged just 213,000 a week before rising in May. They hit 250,000 in late July, supporting the notion that high interest rates were finally cooling a red-hot U.S. job market.
In October, the U.S. economy produced a meager 12,000 jobs, though economists pointed to recent strikes and hurricanes that left many workers temporarily off payrolls.
The Labor Department reported in August that the U.S. economy added 818,000 fewer jobs from April 2023 through March this year than were originally reported. The revised total was also considered evidence that the job market has been slowing steadily, compelling the Fed to start cutting interest rates.
—From AP reports
