CFTC Nominee Vows To Back Regulatory Reform

CFTC Nominee Vows To Back Regulatory Reform - 2/4/2009

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CFTC Nominee Vows To Back Regulatory Reform
Jacqueline Bell

Securities Law 360. February 4, 2009
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EXCERPT: Gary Gensler, President Obama's pick to head the U.S. Commodity Futures Trading Commission, has assured lawmakers of his commitment to regulatory reform and vowed to support new enforcement initiatives if he is confirmed. In a letter answering 19 questions released by Sen. Carl Levin, D-Mich., Gensler said Wednesday that the financial crisis has made clear that additional safeguards are necessary to protect markets and investors. “I believe that both our financial system and our regulatory structure have failed the American people. To achieve the regulatory reform required by our citizens and the overall system, I believe we must work to ensure for a far more stable and resilient financial system, to better protect market integrity and the price discovery function and to provide increased protection for consumers, borrowers and investors,” Gensler wrote. If he is confirmed by the Senate, Gensler said, he will work to bring over-the-counter derivatives into mandatory central clearinghouses and onto exchanges, set up a regulatory structure for derivatives dealers, and craft oversight for credit default swaps, among other measures. Gensler also said he believed that excess speculation in commodity futures can lead to unwarranted spikes in commodity prices, and he vowed to ensure that the CFTC uses its authority to guard against excessive speculation. After a mid-January meeting with Gensler, Sen. Tom Harkin, D-Iowa, chairman of the Senate committee with jurisdiction over the FTC, expressed concern with what he said was a “deregulatory orientation in this nominee's past.” Harkin said he would explore that issue during Gensler's nomination hearing, which has not yet been scheduled but is expected to be held later this month. Gensler's letter reflected a growing sentiment on Capitol Hill in favor of tightening regulation of over-the-counter derivatives.

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