He’s been canned by the Obama administration for being too hard on the banksters, but on the way out, is implementing the meaningful derivatives reforms for which he was fired:
US regulators are likely to close a crucial loophole in Dodd-Frank rules in the next few weeks, in a move that will cost US banks many millions of dollars of revenues in the US$640trn derivatives market.
Several sources familiar with the internal discussions at the Commodity Futures Trading Commission say that the current exemption – which allows US banks executing derivative trades outside the country to bypass tougher capital holding and reporting requirements – will be allowed to expire on July 12.
CFTC chairman Gary Gensler, the only person with the authority to call a vote on extending the exemption, is said to oppose any extension and a spokesman confirmed that no vote had been scheduled.
“He’s determined not to extend,” said a lawyer familiar with discussions between lobbyists and the chairman. “And if it’s true that Gensler is leaving, maybe he wants this to be his final act before leaving.”
This is clearly a very large f%$# you to Barack Obama, Jack Lew, and (particularly) Timothy Geithner, and it is a well deserved f%$# you.
Obama and his and His Evil Minions™ have been determined to subvert meaningful banking regulations, and it’s nice that someone is standing up to him.
It will cost the banks some money, but I do not care:
If the exemption expires, all swaps deals involving US banks would be subject to the Dodd-Frank rules. Banks would have to set aside significantly more capital against each trade, which would eat into profits and potentially even drive clients to other banks.
Such deals would also become subject to much more onerous reporting requirements and would have to be cleared through an exchange – which could also reduce profitability and push away custom.
Figures from the US Treasury show that US financial institutions reported derivatives trading revenues of US$4.4bn in the fourth quarter of 2012, a 73% increase on the previous year.
There is an old saying about people who are inconvenient, “It’s better to have him inside the tent pissing out, than outside the tent pissing in.”
I thank Gary Gensler for pissing in. On the matter of financial regulation, it is a very well deserved smack down.
H/T Naked Capitalism.