Gensler Rushes to Lock in Swap Rules as Wall Street Pushes Back

According to Bloomberg,

Gary Gensler has only weeks left as chief of the Commodity Futures Trading Commission. His message for Wall Street: I am not leaving quietly.

As the clock ticks down, Gensler has issued more than a dozen advisory opinions directed at reining in the largest financial firms and swap traders without votes by his fellow commissioners. He’s also insisting on tightening the Volcker rule ban on proprietary trading by banks, making last-minute demands that could derail a regulation that must be approved by five U.S. agencies.

Banks reeling from his final push have consulted with lawyers about whether to take the CFTC to court, according to four people briefed on the matter.

Gensler, 56, has fought a five-year battle with the industry over how to draw up a safer and more open marketplace for derivatives, the products that helped push the world economy to the precipice in 2008. Gensler is trying to cement his legacy, said Fred Hatfield, a former Democratic commissioner at the agency.

Gensler is “trying to do an awful lot in a very short amount of time,” said Hatfield, who now works at Patomak Global Partners LLC, a regulatory consulting firm in Washington. “He’s leaving as little to chance as could be possible.”

President Barack Obama has nominated Timothy Massad, 57, a Treasury Department official, to succeed Gensler, whose term has expired and must leave by the end of the year.

Chess Match

The activity in recent weeks has set up the equivalent of a high-stakes chess match between Gensler and the financial industry, which was holding off negotiating on some rules until he left, according to two people involved in the discussions. They and the others interviewed for this story spoke on condition of anonymity because their meetings were private.

The agencies that must sign off on Volcker also have been dealing with Gensler’s last-minute bargaining tactics. All five regulatory agencies don’t have to issue the rule simultaneously, and in light of Gensler’s questions some have discussed whether to press ahead and publish the rule without waiting for the CFTC to act, the Wall Street Journal reported yesterday, citing sources familiar with the process.

A former Goldman Sachs Group Inc. partner, Gensler is well-schooled in the ways of Wall Street and has emerged as one of its main adversaries in Washington. In implementing the derivatives rules mandated by the 2010 Dodd-Frank Act, he often takes an issue to the brink before striking a deal that is more amenable to the industry than what he first proposed.

 

 

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