Commodity Futures Trading Commission Chairman Gary Gensler said U.S. regulators will not succumb to Wall Street efforts to weaken financial-market oversight as they implement regulatory reform.
"Wall Street would like to keep these markets dark, and Congress has said there has to be transparency," Gensler said in an interview for Bloomberg Television's "Political Capital with Al Hunt" that was scheduled to air over the weekend. "Congress has been very specific, and we are going to follow it."
CFTC and Securities and Exchange Commission staff members were to meet in Washington Friday to discuss derivatives regulation, and invited representatives from Morgan Stanley, JPMorgan Chase & Co. and industry trade groups to attend. Under the Dodd-Frank Act, regulators must ensure that most swaps are processed by clearinghouses and traded on exchanges.
Gensler said the SEC, the Federal Reserve and the Federal Deposit Insurance Corp. will be as open as possible in publicly disclosing meetings with banks and their lobbyists related to the rules overhaul. The FDIC has already announced plans to post reports of meetings on its website.
"We are still sorting through this," Gensler said. "We are already posting any memos or documents that are handed to us by the various outside parties, so we are very similar. I think that the next step is just to post the actual meetings."
Efforts to boost oversight of derivatives follow the collapse of the U.S. housing market, which sparked a credit-market freeze in 2008 that led to the worst financial crisis since the 1930s. Private swap deals complicated efforts to stem the meltdown, because regulators could not easily determine how much the contagion had spread among different firms.
Wall Street will be motivated to continue lobbying over the derivative provisions in the Dodd-Frank law, because they have a duty to shareholders to maintain profits, said Gensler, a former Goldman Sachs Group Inc. partner.
"There will be those that try to weaken the rules, but I think the Congress has been very specific," Gensler said. "There is going to be transparent trading of the standard swaps."
The CFTC and SEC will collaborate in developing rules for derivatives, as they will share oversight of the products whose value is linked to assets such as stocks, bonds or commodities.
