Nomination Of Gary Gensler To Be Chairman Of The Commodity Futures Trading Commission

Floor Speech

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Mr. SANDERS. Mr. President, for the past 5 months, I blocked consideration of the nomination of Gary Gensler to head the Commodity Futures Trading Commission, the CFTC. As a strong supporter of President Obama, I took no particular pleasure in doing that. 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 1991 to 2001, I did not believe Mr. Gensler was the right person at the right time to help lead this country out of the financial crisis we find ourselves in today. In my view, we need a new vision of what Wall Street should be--one that is not obsessed with quick profits, bubble economies, and huge compensation packages for top executives. We need financial institutions which will invest in a productive economy and which will help create millions of decent-paying jobs as we rebuild our Nation and rebuild the middle class.

I am happy to say that last week I had a productive meeting with Mr. Gensler, the second meeting I have had with him. While Mr. Gensler is clearly not the nominee I would have chosen for this position, nor were his answers all that I would have liked, there is no question in my mind that he is a stronger nominee today than he was 5 months ago when I first met him.

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

In terms of strongly regulating credit default swaps and other derivatives--something 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; recordkeeping 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:

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.

Mr. President, I ask unanimous consent to have printed in the Record all of Mr. Gensler's written responses to me dated May 14, 2009.

There being no objection, the material was ordered to be printed in the Record

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Mr. SANDERS. Mr. President, needless to say, I am encouraged by the commitments Mr. Gensler made to me to regulate hedge funds, to make sure 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--not all but many--of the goals 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 headed in the right direction to make sure a financial crisis of this magnitude never occurs again.

As a result of the greed, the recklessness, and the illegal behavior of Wall Street, our country has been thrown into a deep recession which has caused intense suffering for millions of our people. 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, that company 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 we should stand up today, on behalf of the American people, to our modern-day robber barons. Most importantly, we need to end the era of deregulation that has led to the worst financial crisis since the Great Depression.

While I am still not convinced that Mr. Gensler is the independent leader we need at this time to head the CFTC, the strong commitments he has made recently in support of serious regulations of the financial industry lead me to believe he now understands the direction we as a nation have to go. Mr. Gensler certainly is a knowledgeable person and he has the ability to do a very fine job if he is willing, in fact, to stand up for the American people and assume the courage, the great deal of courage, he will need to stand up to the very powerful financial institutions which have so much control over what goes on here in Congress. In fact, 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 Mr. Gensler as he assumes the Chair of the CFTC.

I yield the floor.

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