Opening Statement, Meeting of the Commodity Futures Trading Commission

Chairman Gary Gensler

July 7, 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 final rulemakings under the Dodd-Frank Wall Street Reform and Consumer Protection 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 embark upon the final rulemaking phase of implementing the Dodd-Frank Act. Specifically, we will consider final rulemakings relating to:

• Enhancing the Commission’s ability to protect against fraud and manipulation;
• Large trader reporting for swaps on physical commodities;
• Definition of “agricultural commodity;”
• Preventing certain business affiliate marketing and establishing other consumer information protections under the Fair Credit Reporting Act; and
• Expanding scope of privacy protections for consumer financial information under the Gramm-Leach-Bliley Act.

Before we hear from the staff, I’d like to thank the dedicated CFTC staff for their tireless efforts to implement the Dodd-Frank Act while also enforcing the agency’s existing statutory authority. Staff has taken on the many challenges of bringing oversight to a swaps market that is more than seven times the size of the futures market that we have historically regulated, with limited funding and limited staff resources. They should be commended for their contributions to the agency, the financial markets, the economy and the American public.

I also would like to thank Commissioners Dunn, Sommers, Chilton and O’Malia for their significant contributions to the rule-writing process.

It is important to remember why it is so essential that we finalize rules to bring oversight to the swaps market. The 2008 financial crisis was very real. Millions more Americans are out of work today than if not for the financial crisis. Millions of homeowners now have homes worth less than their mortgages. Millions of people have had to dig into their savings; millions more haven’t seen their investments regain the value they had before the crisis. There remains significant uncertainty in the economy.

The 2008 financial crisis came upon us because the financial system failed. The financial regulatory system failed as well. Though there were many causes to the crisis, it is clear that swaps played a central role. They added leverage to the financial system with more risk being backed up 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. Swaps – initially developed to help manage and lower risk – actually concentrated and heightened risk in the economy and to the public.

Today’s public commission meeting is the first of many to fully implement the Dodd-Frank Act. This spring, we substantially completed the proposal phase of rule-writing and further benefited from an extra 30 days for public comment. The staff and commissioners now are turning toward final rules. And today, we are taking up five very important rules.

In the coming several months, we will have additional public meetings to finalize rules; for example: whistleblower rules; the process for review of swaps for mandatory clearing; and the registration requirements for swap data repositories.

Each of these rules is an essential component to fulfilling the requirements of the Dodd-Frank Act to bring essential protections to the swaps markets and to the broader economy.

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 7, 2011