Budget woes may cause US swap rule delays - Gensler
by Jack Reerink and Roberta Rampton
WASHINGTON, Oct 30 (Reuters): - Gary Gensler, the Washington
regulator Wall Street fears the most, is confident he'll get a complex
morass of rules in place to lessen risk in derivatives trading and curb
speculation in commodities.
The chairman of the Commodity Futures Trading Commission has a
color-coded flowchart big enough to cover a desktop in his office
tracking the overlapping timeliness to issue what could be 50 to 60
rules to overhaul the $615 trillion over-the-counter derivatives
business.
The agency wants to figure out the first draft of its rules by
mid-December, and is required by law to finish them all by July 15.
"It's doable," Gensler said on Friday in an interview with Reuters.
"Like so many things in life ... it's really just about breaking it
down into its component parts," said the 53-year-old widower, likening
his approach to the advice he gives his three teenage daughters on their
math homework.
Gensler, who spent almost two decades at Goldman Sachs, is energized
to overhaul the market. It's a momentous task as the business is complex
web of tailor-made trades in financial instruments that is major profit
center for Wall Street and has been blamed for exacerbating the recent
financial crisis.
"The opportunity here is enormous," he said, just ahead of a 5 p.m.
meeting with "the swap dealers definition team," a half-dozen staffers
carrying in stacks of documents.
"This is like the 1930s for the Securities and Exchange Commission. I
mean, I am just tickled pink," he said, as he dismissed any ideas that
he might have his eyes on an even bigger prize of becoming the next
Treasury secretary.
Gensler has headed the Commodity Futures Trading Commission - a once
sleepy agency that dealt with overseeing exchange-traded futures - since
May 2009.
He helped convince Congress to push most OTC derivatives to trade on
market places and go through clearinghouses, which guarantee traders
meet their obligations and require down payments.
The obstacles are many, from reporting complicated tailor-made trades
between multiple parties around the world to processing the information
and policing it.
Now, he must again convince Congress - this time to give his agency
enough money.
Gensler, a self-professed "numbers guy" who grew up in Baltimore
helping his father count nickels from vending machines, knows exactly
how many staff he has - 688 - and how many he'll need - 1,143.
He has plenty of takers in the economic downturn: Some job postings
attract as many as 100 resumes.
The problem is getting the $261 million annual budget he needs from
Congress where skeptical Republicans are expected to gain power in the
Nov. 2 elections, and may even win control of the House of
Representatives.
"I'm still hopeful," Gensler said.
He warned of delays in registering 300 new swaps dealers, trading
venues, and data facilities.
"We've got ... to do something more than just 'robo-sign' them,"
Gensler said.
That's the right thing to do, says Michael Gorham, a professor at the
Illinois Institute of Technology and former director of the CFTC's
division of market oversight.
"I admire the fact that he said ... that we're not going to speed up
the whole process to accommodate the huge demand," Gorham said.
Gensler's oft-preached mantra about how clearing and exchange-trading
OTC derivatives will prevent another financial melt down has become
conventional wisdom in Washington - much to the chagrin of Wall Street,
which fears increased record keeping and legal compliance that does
little to limit risk.
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