Opening Statement, Meeting of the Commodity Futures Trading Commission
Chairman Gary Gensler
July 19, 2011
Good morning. This meeting will come to order. This is a public meeting of the Commodity Futures Trading Commission (CFTC) to consider issuance of proposed and final rulemakings under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). I’d like to welcome members of the public, market participants and members of the media to today’s meeting, as well as welcome those listening to the meeting on the phone or watching the live webcast.
During today’s meeting, the Commission will consider two proposed rules and three final rules. Specifically, we will consider proposed rulemakings relating to:
- Customer clearing documentation and timing of acceptance for clearing; and
- Clearing member risk management.
We will consider final rulemakings relating to:
- Process for review of swaps for mandatory clearing;
- Process for registered entity rule submissions (Part 40); and
- Removing references to credit ratings in Commission regulations.
Before we hear from the staff, I would like to thank Commissioners Dunn, Sommers, Chilton and O’Malia for their significant contributions to the rule-writing process. I also want to thank the hardworking staff of the CFTC for their efforts to implement the Dodd-Frank Act.
This week is the one-year anniversary of the Dodd-Frank Act. And on this anniversary, it is important to remember why the President and Congress came together to pass this historic law.
The 2008 financial crisis occurred because the financial system failed the American public. The financial regulatory system failed as well. When large financial firms, such as AIG and Lehman Brothers faltered, we all paid the price.
The Dodd-Frank Act includes critical swaps market reforms to protect the American people. The law brings much-needed transparency to this marketplace and reduces the risk of swaps to the overall economy. It also lowers the possibility of taxpayers standing behind large financial institutions.
Though the crisis had many causes, it is clear that the swaps market 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 and helped to accelerate the financial crisis. They contributed to a system where large financial institutions were thought to be not only too big to fail, but too interconnected to fail.
Since the passage of the Dodd-Frank Act, the CFTC has been working diligently to write rules to implement swaps provisions in the law that will ensure swaps no longer operate in the shadows and financial institutions pose less risk to taxpayers. We have substantially completed the proposal phase and have now turned toward final rules. Today’s meeting is the second of what will be many public commission meetings to consider approving final rules. Another public meeting is scheduled for early August. But until the CFTC completes its rule-writing process and implements and enforces these new rules, the public remains unprotected.
Before we hear from the staff on the rulemakings that we will consider today, I will recognize my fellow Commissioners for their opening statements.
Last Updated: July 19, 2011