Pushback of the Week, December 28, 2025

SEC Commissioner Caroline A. Crenshaw Says Transparency Is Important

In October 2018, with connivance from both sides of the political aisle, the first Trump administration adopted a momentous administrative policy—Federal Accounting Standards Advisory Board (FASAB) Standard 56—that perhaps did more to take the federal finances dark than any action before or since. As Solari reported at the time, FASAB 56 allows government entities and contractors to “move numbers around to conceal where money is actually spent or even not report spending outright,” making government financial reporting “so unreliable as to not be a useful tool to the public.”

FASAB 56 also came with serious implications for investors, eliminating “any hope that the investor will be able to obtain sufficient information to accurately assess the credit and value of … holdings of U.S. Treasury and other securities whose values are affected by Statement 56.” But when the U.S. Securities and Exchange Commission (SEC)—the nation’s foremost agency in the fight against financial fraud—was given an opportunity to comment on the policy, it essentially said, “No comment.”

If we look at what has been done to take the markets dark—which includes not just FASAB 56 but also special tax benefits to private equity, the government’s ongoing refusal to produce audited federal financial statements as required by law, or national security waivers affecting private banks’ and corporations’ compliance with SEC regulations—it is clear that the problem has been growing for quite some time.

Caroline A. Crenshaw began serving as a career staff attorney at the SEC in 2013 (and thus was present when the agency declined to sound any alarm about FASAB 56), becoming one of the agency’s five president-appointed commissioners in August 2020. She also serves as a major in the Army Reserve, Judge Advocate General’s (JAG) Corps. In a recent Brookings Institution speech, Crenshaw made comments—albeit in a limited and muted way—that drew attention to the significant loss of transparency.

Referencing current SEC actions to “mov[e] markets out of the light and into darkness,” Crenshaw commented on the likely consequences:

“Investment decisions will inevitably be based on either: (i) stale data, (ii) data voluntarily released by companies that lack uniformity (at best) or are cherry-picked (at worst); or (iii) on information other than company metrics, such as social media posts, promotions, hype, or even just ‘vibes.’”

She also criticized an SEC policymaking process increasingly “shrouded in darkness,” suggesting that the agency’s flouting of notice-and-comment rulemaking requirements sends a “clear message that the Commission does not value [investor] perspectives.”

Our markets have been losing transparency and liquidity for a long time. We are destroying the goose that laid the golden egg. It is good to see someone from the SEC at least starting to address the problem. Crenshaw deserves credit for encouraging the conversation.