By Zachary A. Goldfarb
Washington Post Staff Writer
Tuesday, April 28, 2009
President Obama's pick to head the federal agency in charge of policing commodities futures is languishing in the Senate despite the troubles in the market and planning for new financial regulations.
Gary Gensler, a former Goldman Sachs banker and Treasury Department official in the Clinton administration, was nominated on Dec. 18 to lead the Commodity Futures Trading Commission.
In March, his nomination cleared the Senate Agriculture Committee, which oversees the CFTC, but the full Senate hasn't held a vote because Sen. Bernard Sanders (I-Vt.) is blocking his appointment. He said Gensler isn't the right man for the job because as a Clinton official he sought to exempt derivatives known as credit default swaps from regulation. Sanders blames this absence of regulation for the collapse of insurer American International Group and the government's subsequent rescue of the firm "in the largest taxpayer bailout in history."
"We have a fellow who is being nominated for an extremely important position whose background is such that he's strongly advocated policies that have led to the financial crisis," Sanders added.
Sanders has declined to characterize the strength of this opposition, saying he is discussing the matter privately with the White House. In parliamentary custom, a single senator can stand in the way of a vote on a nominee for the executive branch.
Jim Manley, a spokesman for Senate Majority Leader Harry M. Reid (D-Nev.), said the White House is trying to overcome the concerns of some senators. A White House spokeswoman, Jen Psaki, declined to comment.
The CFTC's four sitting commissioners are rotating as temporary chairman. Meanwhile, the agency is active on several fronts, including investigating large commodities frauds, planning to oversee a new market in carbon trading that will be central to curbing greenhouse gases, and preparing for a revamp of the nation's financial regulatory system.
The Obama administration has proposed that derivatives come under increased regulation, but there's a turf war over whether the Securities and Exchange Commission, the CFTC or the Federal Reserve would oversee this market. One option favored by some senior officials is for the CFTC to be merged with the SEC.
Gensler, who declined to comment for this story, has changed his position on derivatives, saying at his Senate confirmation hearing in February they should all be traded on regulated exchanges. This would go further than the position of Treasury Secretary Timothy F. Geithner, who supports establishing clearinghouses for trading in most kinds of derivatives but does not back requiring that they be traded only on regulated exchanges.
Gensler has received support from many senators, including the 20 members of the Agriculture Committee.
"Gensler has a deep understanding of finance, both internationally and domestically, and he knows how to turn that knowledge into policy that will protect interest of our country and consumers," Sen. Barbara A. Mikulski (D- Md.) said at his confirmation hearing. "At a time of grave financial turmoil and deep uncertainty we need someone with Gary Gensler's skills and his values to lead the Commission."
Industry groups and public interest groups also support Gensler's nomination.
"There is a problem with Gary Gensler not assuming the needed role and pursuing important regulatory initiatives to improve transparency over commodity markets and derivatives exchanges," said Tyson Slokum, director of the energy program at Public Citizen.
John Damgard, president of the Futures Industry Association, agreed.
"Without a permanent chairman confirmed by the Senate, the CFTC probably will not be listened to as much as it should while policymakers in Washington and around the globe debate what a new regulatory landscape should look like," he said. "Every aspect of our regulatory structure is up for reconsideration . . . and that makes it all the more important that a permanent chairman be put in place as soon as possible."