"And guess what? The same economics, the same ideology that drove the world to the edge of disaster is STILL at work in corporations, in the financial sector, in governments."
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Gensler Evolving in Derivatives War Sees No Deed Go Unpunished
Gensler: “In 2008, both the financial system and the financial regulatory system failed the test for the American public,” Gensler, 53, told the senators. “An investment in the CFTC is warranted, because, as we saw in 2008, without oversight of the swaps market, billions of taxpayer dollars may be at risk.”
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"“Everyone’s ganging up on him -- Wall Street, the GOP, Fortune 500 companies,” says Michael Greenberger, a University of Maryland law professor and a former CFTC director of trading and markets. “All this fighting is making getting the regulation right more difficult.”
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Wall Street has emerged as Gensler’s biggest nemesis. JPMorgan Chase & Co. (JPM), Bank of America Corp. (BAC), Citigroup Inc. (C), Goldman and Morgan Stanley controlled 96 percent of the $321 trillion derivatives contracts held by U.S. banks in the first quarter, the Office of the Comptroller of the Currency says. The $321 trillion notional amount represents the estimated value of the assets that underlie the derivatives. Goldman and the others make more than $30 billion in annual profit in financial derivatives trading, according to financial consultant Oliver Wyman, a unit of Marsh & McLennan Cos., the world’s second-biggest insurance broker. Dodd-Frank would weaken that grip. The law, which gives the CFTC regulatory powers over 80 percent of the U.S. derivatives market, pushes as much swaps trading as possible onto futures exchanges and to new trading platforms called swap execution facilities.
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“Wall Street has moved the battleground from the halls of Congress to the corridors of CFTC,” says Tyson Slocum, director of the energy program at consumer advocate Public Citizen, who backs tighter regulation of swaps markets. Goldman executives came calling at the CFTC 52 times from last August to mid-June, according to the agency’s website. Morgan Stanley (MS) managers paid 33 visits and JPMorgan Chase officials dropped by 26 times in the same period. It isn’t just big banks that are pestering Gensler: Asset manager BlackRock Inc. came for 25 meetings; hedge fund Citadel LLC had 15.
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“This is a perfect lobbying storm,” says Marcus Stanley, policy director of Americans for Financial Reform, which is seeking greater regulation. “The people who understand the most about the fine print are the ones making money.” Capitol Hill is buzzing with anti-reform sentiment."
More: bloomberg.com
Jim |
