Statement: Nomination of Gensler to Chair the CFTC

WASHNGTON, May 19 - Senator Bernie Sanders (I-Vt.) today issued a statement on the nomination of Gary Gensler to be chairman of the Commodity Futures Trading Commission. Here are Sanders' remarks as prepared for delivery before the Senate confirmation vote scheduled for later this afternoon:

"Mr. President, for the past five months, I blocked consideration of the nomination of Gary Gensler to head the Commodity Futures Trading Commission (CFTC).

"As a strong supporter of President Barack Obama, I took no pleasure in doing this. But given Mr. Gensler's history as a senior executive of Goldman Sachs for 18 years and the role Mr. Gensler played in deregulating the financial services industry as a senior Treasury Department official from 1999-2001, I did not believe that Mr. Gensler was the right person at the right time to help lead this country out of the financial crisis we are in today.

"In my view, we need a new Wall Street - one that is not obsessed with quick profits and huge compensation packages for top executives. What we need are financial institutions which will invest in the productive economy and help create millions of decent-paying jobs as we rebuild our economy and the middle class.

"I am happy to say that last week I had a productive meeting with Mr. Gensler, the second meeting that I've had with him. While Mr. Gensler is clearly not the nominee that I would have chosen for this position, nor were his answers all that I would have liked, there is no question that he is a stronger nominee today than he was five months ago when I first met him.

"In preparation for the meeting last week I outlined a number of issues that I wanted Mr. Gensler to respond to. Let me just highlight some of Mr. Gensler's written replies for my colleagues.

"Here is what Mr. Gensler wrote in terms of strongly regulating credit default swaps and other derivatives, something that Mr. Gensler opposed in the Clinton administration. Mr. Gensler now says: ‘I believe we must urgently move to enact a broad regulatory regime that covers the entire over-the-counter-derivatives marketplace. As a key component of this reform, we should subject all derivatives dealers to:

  • conservative capital requirements;
  • business conduct standards;
  • record keeping requirements (including an audit trail);
  • reporting requirements; and
  • conservative margin requirements

‘I believe that the CFTC should be provided with authority to set position limits on all OTC derivatives to prevent manipulation and excessive speculation. Such position limit authority should clearly empower the CFTC to establish aggregate position limits.'

"Mr. Gensler also wrote to me saying that ‘I will work closely with Congress to pass legislation that will mandate registration of hedge fund advisers. In addition, I will work with agency staff to review all previously granted exemptions from registration.'

"Finally, Mr. Gensler told me in writing that he supports ‘actions to close the ‘London loophole' and ensure that foreign futures exchanges with permanent trading terminals in the U.S. comply with position limitations and reporting and transparency requirements that are applied to trades made on U.S. exchanges.'

"I ask unanimous consent to enter into the record all of Mr. Gensler's written responses to me dated May 14, 2009.

"Mr. President, needless to say I am encouraged by the commitments Mr. Gensler made to me to regulate hedge funds, to make sure that banks are not allowed to manipulate the price of heating oil and crude oil, and to prevent the enormous conflicts of interest that exist with respect to our energy markets, among many other things.

"In addition, last week the Obama administration introduced a comprehensive plan to, for the very first time, significantly regulate credit default swaps and other over the counter derivatives. Exempting these investments from regulation was a huge mistake that led to the $180 billion taxpayer bailout of AIG, the collapse of Lehman Brothers, and greatly contributed to the worst financial crisis since the Great Depression. Last March, I and a number of other senators, asked the president to support strong regulations on these risky investment schemes. The president's proposal accomplishes many of the goals that we have been advocating. While this plan is not as strong as I would have written and may have loopholes in it that need to be closed, I believe we are beginning in the right direction to make sure that a financial crisis of this magnitude never occurs again.

"As a result of the greed, recklessness and illegal behavior of Wall Street, our country has been thrown into a deep recession which has caused intense suffering for millions. We need to end the current era of financial deregulation which largely caused this crisis, and move to a new Wall Street which understands the need for long-term productive investment and job creation rather than short-term profits, outrageous salaries and a bubble economy.

"We need to break-up financial institutions that are too big to fail. If a company is too big to fail, it is too big to exist. We should do the same thing to the banking industry, that Teddy Roosevelt did to break up the oil companies and stand up to today's modern day robber barons.
Most importantly, we need to end the era of deregulation that has led to the worst financial crisis in our nation's history.

"While I am still not convinced that Mr. Gensler is the independent leader that we need at this time to head the CFTC, the strong commitments he has made recently in support of serious regulations of the financial services industry leads me to believe that he now understands the direction in which we have got to go.

"He certainly is an extremely bright and knowledgeable person and has the ability to do a very fine job if he is willing to stand up to the big banks and in support of consumers and the American people. This may be Mr. Gensler's Nixon in China moment. I hope this turns out to be the case and I look forward to working with him as Chairman of the CFTC."