Saturday, April 4, 2009

Sanders and Gensler

In a previous post about the nomination hearing of Gary Gensler to be Chairman of the Commodity Futures Trading Commission, I stated that "it is very likely he will be confirmed." His nomination has, according to press reports, hit a roadblock -- holds by Senator Bernie Sanders and another unnamed Senator.

Often Senators who put holds on nominations are holding out for something they want from the Administration, not because they have a strong objection to the nominee. This is not true in this case though. Senator Sanders objects to Gary Gensler because of his role in the Clinton Administration in getting the Gramm-Leach-Bliley Act and the Commodity Futures Modernization Act enacted. Even though Mr. Gensler has made all the right statements to convince Senator Harkin that he would be tough regulator, it is hard to see what the Administration can offer Senator Sanders to release his hold. It is not clear whether the Senate leadership feels strongly enough about this nomination to bring it to the floor despite Senator Sanders' and the unnamed Senator's objections. To an extent this is a test of will and patience. Mr. Gensler will probably be ultimately confirmed, but it is not a sure thing.

The problem this nomination is having also highlights a problem for the Obama Adminstration. There is a growing consensus that the financial regulatory structure needs to be changed and that some regulatory oversight needs to be strengthened. While the Obama Adminstration can point to what they consider failures in regulatory policy under Bush, two key pieces of legislation, the GLB Act and the CFMA, were enacted in the Clinton Administration and with its support. Some of the people who were involved in the Clinton Administration with these legislative initiatives are now officials or advisers in the Obama Administration. To paraphrase Mr. Gensler in his nomination hearing, views have "evolved."

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