REMARKS OF CHAIRMAN GARY GENSLER
COMMODITY FUTURES TRADING COMMISSION
FUTURES INDUSTRY ASSOCIATION
October 11, 2011
(REMARKS PREPARED FOR DELIVERY)
Good morning. I thank the Futures Industry Association (FIA) for inviting me to speak today and John Damgard for that kind introduction. This is the third year that I’ve spoken at FIA’s Chicago event, and it’s always a good opportunity to hear directly from the futures industry.
I would like to start by taking a moment to talk about what we’ve been up to at the Commodity Futures Trading Commission (CFTC) since I spoke with you at your Chicago conference last year and more recently at your event in Boca.
Before I do that, I’d like to thank and recognize each of my fellow Commissioners: Mike Dunn, Jill Sommers, Bart Chilton and Scott O’Malia for their dedication and significant contributions.
would like to take a moment and say a special thanks to Commissioner Dunn as this may be one of his last FIA functions as a CFTC Commissioner. It has been a great honor to work with and learn from Commissioner Dunn over the last two and a half years.
Commissioner Dunn has served the Federal Government for more than 25 years, including six years as a CFTC commissioner as well as Acting Chairman. He has been confirmed by the Senate an astonishing six times. Mike is a trusted colleague who works incredibly hard in service to the American public at the CFTC. He has helped frame and improve all of the rules that the Commission proposed to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act. He is a trusted friend and an honorable public servant. And, perhaps most importantly, he is a member of the FIA Hall of Fame!
CFTC Rule Writing to Date
Since I last spoke to an FIA event in March, the CFTC has been hard at work. We now have substantially completed the proposal phase of the rule-writing process required by the Dodd-Frank Act. We held 19 public meetings and issued more than 50 proposed rules – on the many important areas of reform called for by the new law, including transparency, clearing and regulating swap dealers.
The CFTC has benefited from significant public input throughout this process. We have received more than 25,000 comment letters – John’s aware of this because he’s sent in so many letters on behalf of the FIA. CFTC staff and Commissioners have met more than 1,000 times with market participants and members of the public to discuss the rules. We’ve had nearly that many meetings with domestic and foreign regulators as well. We also have conducted 14 public roundtables on Dodd-Frank.
This summer, the agency turned the corner and began finalizing rules to make the swaps marketplace more open and transparent for participants and safer for taxpayers. To date, we have finalized 15 rules, and we have a full schedule of public meetings this fall and into next year.
The Financial Crisis
It is important to remember why these rules are so critical. Three years ago, our economy fell into a downward spiral when one large financial institution after another teetered on the brink of failure.
We’re still feeling the aftershocks of that financial crisis. More than eight million jobs were lost, and the unemployment rate remains stubbornly high. Millions of Americans lost their homes. Millions more live in homes that are worth less than their mortgages. And millions of Americans continue struggling each day to make ends meet.
While the crisis had many causes, it is evident that swaps played a central role. Swaps added leverage to the financial system with more risk being backed by less capital. They contributed, particularly through credit default swaps, to the bubble in the housing market. They contributed to a system where large financial institutions were thought to be not only too big to fail, but too interconnected to fail. Swaps – developed to help manage and lower risk for end-users – also concentrated and heightened risk in the financial system and to the public.