Gary Gensler

Commissioner of the Commodity Futures Trading Commission (since May 2009)

(Alex Wong/
Getty Images)

Why He Matters

A former Treasury official and Goldman Sachs employee, Gensler's early nomination in December 2008 came as a surprise to some since the CFTC post typically remains vacant until later into a president's term. Perhaps that's because the $111 million agency will play a larger role in the Obama administration as it grapples with rescuing the U.S. economy from the 2008-2009 crisis.

The CFTC is a small regulatory agency that controls commodity futures trading. Its failure to more stringently regulate both the oil and agricultural markets as prices steeply increased have some wondering about the agency's future. There have even been calls for a merger with the Securities and Exchange Commission (SEC).

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Corrections?

Background

At a Glance

Career History: Self-employed (since 2002); Undersecretary to the Treasury (1999 to 2001); Assistant secretary to the Treasury (1997 to 1999)
Hometown: Baltimore, Maryland
Alma Mater: University of Pennsylvania's Wharton School of Business, B.S. (economics) 1978; M.B.A., 1979

Spouse: Deceased
Web site

Path to Power

Born in Baltimore, Md., Gensler and his identical twin brother, Robert, went to University of Pennsylvania's Wharton School of Business as an undergraduate. Gary Gensler excelled, graduating summa cum laude with a B.S. in economics in 1978 and a year later he finished a master's in business administration at the same school.

In 1988, Gensler joined Goldman, Sachs and Co., specializing in media companies. He advised the National Football League in its television negotiations in 1990. His help led to a record contract for the NFL, raising the price television paid per team to $32 million a year, up from $17 million from the previous contract.

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The Issues

Gensler has taken flak for his history at Goldman Sachs, which forecasted high oil prices in the immediate future and issued investment products based on commodities markets.

"I would not put any Goldman Sachs person in charge," said Fadel Gheit, a managing director of oil and gas research at Oppenheimer & Co. and one who has testified that speculation caused oil prices to jump. "These are the financial geniuses that created the toxic assets. Who are we kidding?"

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Gensler never worked in commodities during his tenure at Goldman, and left Goldman in 1997, well before any speculation would have occurred during the criticized fluctuations in oil prices.

But he's taking over an agency that could find itself nonexistent in a couple of years. SEC head Mary Schapiro once led the CFTC, and Bush Treasury Secretary Henry Paulson has pushed for a merger of the two agencies in an effort to streamline any investigations. It's believed that Obama could support consolidation.

Gensler has not spoken about his goals for the CFTC, but in 2003 he told a BusinessWeek reporter that he doesn't "have much hope for the SEC."

Fannie Mae and Freddie Mac

While at Treasury, Gensler urged Congress to examine government-sponsored entities (GSEs) Fannie Mae and Freddie Mac because they had accrued massive amounts of debt and he feared they should no longer receive government backing.

Gensler sent ripples through the bond market when he supported a provision in a Fannie and Freddie reform bill that would have repealed the housing entities $2.5 billion Treasury line of credit in a March 2000 hearing before the House Banking subcommittee on Capital Markets.

"Congress should seriously consider the best way to repeal such exceptions" to eliminate "the potential for problems at one financial institution to cause instability in the financial markets or at other institutions," Gensler said.

Gensler's boss, then-Treasury Secretary Summers, backed Gensler's statements, and two days later, Gensler repeated them.

"My testimony on Wednesday is consistent with long-standing administration principles in this area and with Secretary Summers' February statement regarding GSEs," said Gensler. "It does not represent a change in the government's relationship with the GSEs."

"As I emphasized in my testimony, given the importance of these institutions to the housing market and the government's long-standing relationship with them it is appropriate for Congress to review the relevant issues from time to time."

Nothing came of Gensler's comments. But Fannie and Freddie ran into major trouble as the housing crisis hit in 2007 and 2008.

The Network

Gensler worked at the Treasury under Robert Rubin, a former Citigroup senior executive and an informal Obama adviser. Gensler also served at Treasury under Obama's head of the White House National Economic Council, Lawrence Summers. Obama Treasury Secretary Timothy Geithner and Deputy Treasury Secretary Neal S. Wolin also worked under Summers with Gensler. In 2002, Gensler helped Sen. Sarbabes write the Sarbanes-Oxley act that strenghtened the SEC. He also contributed to the Hillary Rodham Clinton for presidential exploratory committee as a senior adviser.

As a board member of WageWorks, Gensler has had interactions with WageWorks chief executive Joe Jackson and chairman and chief executive of Blue Shield of California Bruce Bodaken.

Campaign Contributions

Gensler has contributed more than $260,000 since 1994 to various campaigns. All of his money went to Democratic candidates or the Democratic Party.

Additional Resources

Soroghan, Mike, Real Estate Finance Today, "Official's Testimony on GSEs Shakes Bond Market," March 27, 2000
Eichenwald, Kurt, "Investment Bankers Play Football's Newest Position," The New York Times, March 19, 1990
Doering, Christopher, "UPDATE 2-Obama picks ex-Treasury official Gensler for CFTC," Reuters News, Dec. 18, 2008
Wage Works Web site
Wage Works Web site
Talley, Ian and Lynch, Sarah N., "Some Skeptical Of Former Goldman Partner As CFTC Chairman," Dow Jones News Service, Dec. 18, 2008
Orol, Ronald D., "Next SEC Chief Seen As Possible Shareholder Advocate," Dow Jones News Service, Dec. 18, 2008
"Summers:Nothing To Add To Gensler's Remarks On Agencies," Dow Jones International News, March 24, 2000
Der Hovanesian, Mara, "IDENTICAL? DON'T YOU BELIEVE IT Rob Gensler is the star fund manager, Gary the industry critic in New York," BusinessWeek, Nov. 18, 2002
Stone, Amey, "If You Really Want Fund Reform... A trio of prominent - and outspoken - shareholder advocates take on the subject of how to fix the scandal-plagued industry," BusinessWeek Online, Nov. 5, 2003
Stone, Amey, "Inside The Great Mutual Fund Trap; In their provocative new book, two U.S. Treasury veterans use exhaustive research to challenge the concept of managed funds," BusinessWeek Online, Oct. 24, 2002
Treasury Official Says U.S. Views On 'Agency' Debt Haven't Changed," Dow Jones Business News, March 24, 2000
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