February 11, 2010
By Ian Katz and Robert Schmidt
Gary Gensler, chairman of the Commodity Futures Trading Commission (CFTC) and an ex-Goldman Sachs (GS) partner, has shattered any illusions that he will protect Wall Street from tough new derivative regulations. Over a private lunch at the Waldorf Astoria on Jan. 6, Gensler, 52, told executives from Credit Suisse (CS), Deutsche Bank (DB), Bank of New York Mellon (BK), and Goldman that while he once shared their goals—to boost revenues and their own bonuses—his responsibility now was to taxpayers, according to people familiar with the meeting. When one banker asked Gensler what he saw as the biggest obstacle to reform, he gestured toward his hosts and replied: "You."
Of all the regulators in the Administration, Gensler may be the most troubling to the Street. He wants to drag derivative trading out of the shadows and expose to scrutiny the lush margins traders make on these complex securities. Companies use them to protect against oil price swings and other risks; sophisticated traders like to exploit them for profit. Gensler also wants to make it much easier for new competitors to enter the market, which would deprive the five U.S. banks that dominate derivative trading—Goldman, JPMorgan Chase (JPM), Bank of America (BAC), Morgan Stanley (MS), and Citigroup (C)—of billions in profit.
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Last Updated: July 20, 2011