WASHINGTON (Reuters) — As Gary Gensler
wraps up his last day as the head of the U.S. Commodity Futures
Trading Commission on Friday, he leaves behind a long list of ardent
admirers of his tough-nosed reforms and passionate critics who
believe he has injured well-functioning markets.
Once a swaps trader at Goldman Sachs <GS.N> and then a Treasury
Department official known for his role in rolling back bank rules in
the late 1990s, the 56-year-old surprisingly became the regulator
Wall Street feared most in the wake of the financial crisis.
"He's been one of the best regulators I've ever seen," said Barney
Frank, the former Democratic U.S. congressman who lent his name to
the 2010 Dodd-Frank Wall Street reform law.
"With regards to members of the Senate who support regulation, he's
made a bunch of friends. He's clearly alienated a lot of the
bankers."
During his five-year tenure at the helm of the agency, once a
little-watched overseer of commodity futures markets, Gensler
spawned major lawsuits from bank groups, a major dispute with
regulators in Brussels, and a frequent lack of consensus among
fellow commissioners.
"The Street hates him," said one bank lobbyist, asking not to be
named in order to be able to speak more freely.
The CFTC has reshaped the opaque world of derivatives trading, one
of Wall Street's most lucrative businesses that escaped regulatory
scrutiny for decades, but played a central role in the credit
meltdown.
Gensler has finished most of the new rules required by Dodd-Frank,
giving his successor Timothy Massad — a former Treasury official —
little leeway for a policy change.
"The Street's big hope for an incremental rollback of what Gary has
done is going to prove to be misguided," said Dennis Kelleher, the
head of Better Markets, a pressure group critical of Wall Street's
large investment banks.
ALIENATED BANKERS
During Gensler's term at the CFTC, it finished 70 percent of the
rules it was required to write, far more than other U.S. regulators,
and putting it years ahead of a similar process in Europe.
Only weeks ago, Gensler pushed through a plan requiring foreign
banks to comply with the CFTC's rules if they deal with U.S.
clients, despite years of pressure from foreign regulators who want
greater reliance on their own rules.
He also took the strictest position on rules to bring swaps trading
onto exchange-like platforms, though these were watered down after
two members of the commission thought they were too tough on the
industry.
His intense drive to write tough versions of Dodd-Frank rules marks
a reputational change for Gensler. When former U.S. President Bill
Clinton signed into law a plan to free banks from Depression-era
shackles in 1999, he explicitly thanked Gensler — then a senior
Treasury official — for his work on the deregulation legislation.
It made Wall Street critics wary of Gensler when President Obama
nominated him to the job. "Looking back (at) what we know now, I
think those of us involved in the late 90s, you know, ought to have
done more," Gensler said in a recent interview.
He also went through major changes in his personal life between his
time at the Treasury Department and his tenure at the CFTC. Gensler,
who is from Baltimore, raised his three teenage daughters on his own
after his wife Francesca Danieli — an artist — died of cancer in
2006.
He frequently mentions the experience, and also likes to refer to
his father, who had a vending machine business, particularly when
arguing why large banks should not enjoy privileges not afforded to
small businesses.
While speculation about his future has abounded, Gensler has
consistently declined to answer questions as to his plans. He did
unveil, though, in the recent interview he would not travel for a
new position.
"I don't know what I'm going to do next. I know one thing, my
youngest daughter is in 11th grade and I'm staying in the Baltimore
or Washington area," he said.
(Reporting by Douwe Miedema; editing by
Alden Bentley)
