Obama Axes Bank-Harrassing Gary Gensler at CFTC, Plans to Install Lightweight Ex-Goldmanite

Obama is no longer bothering to pretend that he is anything other than a stooge for banks and other big money interests.

The president is effectively dismissing Gary Gensler, the ex-Goldman partner who headed the Commodities Futures Trading Commission. Gensler used his post at a secondary financial regulator to push for reforms. It was his office that blew the Libor scandal wide open by taking referrals from British regulators seriously (by contrast, Geithner, who heard about widespread, deliberate mismarking in 2008, passed the buck to the Bank of England). Gensler has also been making himself unpopular by taking the view that swap dealers, which includes foreign branches of US banks and parties that conduct business with US parties, must comply with Dodd Frank. As Automated Trader noted in April:

“As the CFTC completes the cross-border guidance,” Gensler said, “I believe it’s critical that Dodd-Frank swaps reform applies to transactions entered into by branches of US institutions offshore, between guaranteed affiliates offshore, and for hedge funds that are incorporated offshore but operate in the US.”

In a speech before the US Chamber of Commerce, he added: “Where there are comparable and comprehensive home country rules abroad, we can look to substituted compliance, but the transactions would still be covered.”

Gensler has made strict adherence to Dodd-Frank a centrepiece of his swaps market reform campaign, although his initial stance generated considerable pushback from market participants and foreign regulators alike.

In his latest speech, he repeated his concern about risk overseas coming back to the United States.

“During a default, risk knows no geographic border,” Gensler said. “If a run starts in one part of a modern financial institution, whether it’s here or offshore, the risk comes back to our shores. That was true with AIG, which ran most of its swaps business out of the London neighborhood Mayfair. It was also true at Lehman Brothers, Citigroup, Bear Stearns and Long-Term Capital Management.”

He’s also made himself more of a threat than most regulators via his willingness to get into the weeds of regulatory language. One of the ways banks and large corporations get their way today is that legislation is seldom specific enough to serve as a guideline for regulators, who need to develop detailed rules. Lobbyists swarm over this process like locusts, both by organizing their clients’ allies to weigh in against tougher rules, and by insinuating themselves deeply enough in the process that they provide the text for the rules, which is often adopted wholesale by the regulator. So someone like Gensler who was willing to insert himself in this process was a considerable impediment to the banks’ usual route for quietly getting their way.

Shahien Nasiripour at the Huffington Post describes how Gensler is being ousted for his position on swaps regulation, which was coming to a head in international meetings starting June 20, with a July 12 deadline looming. The industry was pushing for the usual “race to the bottom” approach, since the Dodd Frank provisions are more stringent than overseas requirments (the spin, of course, was that Gensler was acting unilaterally, as opposed to implementing what Congress mandated). Gensler faces varying degrees of resistance from three of his four fellow commissioners. International regulators were apparently also unhappy with Gensler’s tough stand, to the point where they were complaining to Treasury Secretary Jack Lew.

Even if Obama fails in fast-tracking his chosen replacement, Amanda Renteria, Gensler’s lame-duck status will considerably weaken his ability to arm-twist the fence-sitters among his colleagues.

And Renteria is a simply pathetic choice. Oh, she’s got a very appealing personal story, having worked her way up from a very disadvantaged background, a child of migrant workers who made her way to Stanford and later Harvard Business School. But there’s nothing in her background that qualifies her to act either as a senior regulator or as the head of a large operation (the CFTC has over 400 employees). This leap in responsibilities is tantamount to taking a promising law firm associate and making them the head of a large law practice. You’d never do that if you cared about the health of the firm. A move like this looks an awful lot like an effort not just to sideline Gensler’s push on swaps regulation, but to render the CFTC incompetent over time.

Renteria’s knowledge of finance appears to consist of having worked right after college for a few years at Goldman. She served as an analyst in the then investment bank’s Wealth Management Division. Analysts (the role between college and business school) are typically worked very hard on low-discretion tasks that still require a high degree of accuracy. They might also get to see clients now and again. She was in the business that hawked products to super rich clients and appears to have done some modeling, but she was a LONG way away from derivatives operations, particularly the parts that dealt with institutional clients and the firm’s risk management. In other words, she’s highly unlikely to have observed much if any tradecraft that would be relevant to her CFTC role.

And if you read her own description of her activiites since 2008, as Chief of Staff for Senator Debbie Stabenow of Michigan, she’s done perilous little on finance matters. Nasiripour confirms:

Renteria has little experience in financial regulation. Congressional aides who worked on the 2010 overhaul of financial rules known as Dodd-Frank said she played a bit role in formulating the law.

Jesse charitably writes:

She might turn out to be a highly effective regulator despite her lack of practical experience in financial regulation. That would be a nice change of pace for a generally docile and Big Finance compliant administration. Let’s see what she has to say. But I am not hopeful given the Obama crew’s abysmal track record in financial reform and ‘change you can believe in.’

Renteria will be scripted well enough to sail through confirmation hearings. But she’s utterly lacking in the experience needed to even begin to do her job, let alone stand up to pressure from big banks or parse their legalistic legerdemain. Even if her intentions are the best, it will be easy to steamroll her. The fact that Obama would nominate someone who is not even remotely up to the role shows that he’s not bothering to hide that he’s handing the store over to corporate interests.

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  1. YankeeFrank

    Lame duck status can’t come too soon. Hopefully these scandals, both the fake ones and real ones, will cripple Obama. Seriously, this guy is such a corporate whore he makes Bush seem like a socialist (at least Bush hit the heads of Enron, Tyco, etc. hard when they failed in a rainbow of corruption). A weak and ineffective Obama means no TPP, no social security cuts (those look done anyhow, at least for now) and hopefully a serious curtailment of the NSA surveillance and drone horrorshow. I know, I’m an optimist.

  2. jake chase

    Here’s how the selection process worked: two guys sitting in a room surrounded by a mountain of resumes.

    first guy: Boss says we need a minority;

    next guy: Of course, we really need a female minority;

    first guy: Okay, we need a female minority who looks as though she might have a brain. I know we have one in here somewhere (shuffles deftly). Wait, here’s one: she once had a summer job carrying donuts at Goldman!

    second guy: You’re kidding!

    first guy: Nope, wow, just picking her out of this pile could get us promoted;

    second guy: Wait, what’s she done since?

    first guy: Well, she hasn’t done anything since, hung around senator Bilge and answered the phone, wrote some letters, I think I met her once at some fund raiser.

    second guy: Ever take any position on banks?

    first guy: (clicks a few keys on his keyboard) Nothing shows up. You don’t count objecting to fees on her checking account, stuff like that?

    second guy: Well, we can’t have some sorehead, can we?.

    first guy: No, nothing like that (clicks more keys) She said somewhere it would be nice if the banks started making loans. I think she was serious though, not sarcastic like some of them.

    second guy: Well, we’ve got to get Gensler out of there. SOB got religion somehow, thinks he can save the world. Boss is really pissed. He’s only got three more years until he cashes in. Let’s just wing it. Let the bank lawyers worry about her. I bet she knows the gig won’t last forever. That’s enough to motivate most people.

    1. pws

      ” Oh, she’s got a very appealing personal story, having worked her way up from a very disadvantaged background, a child of migrant workers who made her way to Stanford and later Harvard Business School. ”

      These days all the villains are like this. I think Carmen Ortiz’s life story is something similar. As long as they are willing to do evil, these kinds of stories are just a distraction, like putting your nasty poison in a bottle of decent wine.

    2. MB

      Add a touch of Sopranos. Something like:

      Pay Big O a visit and explain the program. Maybe a nice vacation with his wife and kids. He’ll be too busy but he’ll “try” to get away. That’ll take care of Mr. G.

  3. Conscience of a Conservative

    The writing was on the wall for a long time on swaps regulation. The banks make too much money from the current system and for many market participants the allure of cheap up front costs (versus true total costs or counter-party exposure) was simply too much for Gensler. 2008 was like 100 years ago, too much for the collective memory of the American people, and certainly for Congress and the President. Sadly we will be revisiting this issue in the future not by choice, but by necessity.

  4. Chris Engel

    Editing Powerpoints and dealing with a douchebag Associate as her boss for a couple years does not qualify her do anything in society, let alone regulate a highly profitable area of banks.

    She’s a bottom. Worse, she’s essentially a blank slate for the banksters to mold into their understanding of what “public interest” means.

  5. diptherio

    You know, I would love to head up the SEC. I hear it pays pretty well. I used to think that I didn’t have enough experience (any) for the job, but this Ms. Renteria has given me hope. That’s what I call an equal-opportunity President.

    1. Chris Engel

      Actually at SEC it’s Mary Jo White, who has a lot more potential to actually act in the public interest and not think only about future career options because:

      1) She’s actually a well-informed insider, and on both sides of the legal aisle.

      2) She’s old (no offense, and no I’m not being sexist) enough to not be trying to claw her way up and perhaps she’s ready to really stick it to the corrupt financial interests.

      3) She has a reputation as a tough one and that’s something she’s worked hard to build up and she will maintain, perhaps trying to create a legacy even?

      By contrast, Renteria (choice for CFTC, not SEC):

      1) Is by no indication well-informed on issues of financial regulation, let alone the complexity of markets and the way banks historically manipulate the system against public interest.

      2) She’s far too young (she graduated Stanford undergrad in ’97, making her probably under 40 — http://www.linkedin.com/pub/amanda-renteria/5/94/396 ) and will certainly be thinking about exit options and thus undoubtedly taking it easy on the banks.

      3) She has no reputation, she is a blank slate. Her “sell” is her sob story about working her way up in an immigrant family or whatever the hell. She’s simply not qualified for this role, not one iota.

      This is truly insane. There’s no indication whatsoever that she understands the issues or has a keen eye for what is in the public interest and what the true issues are in financial regulation in the shadow of the 07-08 crisis. Aside from a one year stint as a high school teacher before going to HBS (Check out the “farewell” Stabenow (D-MI) gave her on the congressional record: http://capitolwords.org/date/2012/12/20/S8299-2_tribute-to-amanda-renteria/ — maybe she was just waiting for the HBS application period to go through and was killing time?) There doesn’t seem to be any desire for public service in her (and no, her time as a staffer does not mean she cares about public service, it means she cares about career advancement).

      The only hope is that senators are spooked by her age and inexperience and do the right thing and deny this woman the opportunity to roll back what little progress we’ve made (and yet to make) in finreg from CFTC’s end.

      1. OMF

        2) She’s far too young (she graduated Stanford undergrad in ’97, making her probably under 40 — http://www.linkedin.com/pub/amanda-renteria/5/94/396 ) and will certainly be thinking about exit options and thus undoubtedly taking it easy on the banks.

        Absolutely. Call me ageist, but I think 55 should be the absolute minimum age for anyone working in a senior position. Stuff like that 29 year old in charge of the SEC disturbs me. This is very like what happened in Bagdad, where 23 year olds with no experience were placed in charge of traffic management and the like. This is how the courts and palaces of the old world were run.

        I’m under 30 myself.

      2. jake chase

        As for MJW and her ‘reputation as a tough one’, tough on who, exactly, and for what?

        1. Chris E.

          I don’t want to get into it on MJW as I don’t wish to defend her. I’m with Taibbi on being very suspicious of her and I’ll wait to see her actions, but assume the worst.

          However, the fact is the media profile pieces done on MJW, which quote and reference people familiar with her, do suggest a reputation of her being a tough prosecutor and a strong defense attorney, even a power-player ( Here’s one example of many: http://dealbook.nytimes.com/2013/01/24/mary-jo-white-to-be-named-new-s-e-c-boss/ ). My main point was that she was experienced, had already established a reputation, and thus wasn’t just a flimsy new fish ready to be directed by the banksters who will surround her (as I contend Renteria is). The flip side of the “blank slate” point is of course that she could surprise us all and become a major hawk for public interest and holding the big players accountable (but there’s no signs of that).

          1. jake chase


            If the NYT puff piece is the best you got I think you may be drinking the Kool Aid. I’ll be convinced when she prosecutes the first big shot banker.

        2. Chris E.

          I’m not saying what _I_ think of her. I was making a point about why I was not happy about Renteria, by using MJW as a comparison. MJW had built up a reputation among her colleagues, which I used the NYT piece as an example (you contested my point about her reptutation, I was pointing to an example of her reputation), which I was contrasting with Renteria who has no experience or reputation so she’s a blank slate and a huge risk at being co-opted by banking interests. That’s all, period. I’m not a defender of MJW.

  6. OMF

    Yves I have to ask your opinion on the wider context of this.

    Do you think this is part of an explicit conspiracy, or simply an unstated culture? I was never a conspiracy theorist, and this seems to wide and far reaching to be something under the control of a smaller group.

    So, I’m really asking: Do you think there is a rotten culture at work here which actively makes the wrong decisions, in order to perpetuate itself and the rewards of its existence for those involved?

    I think there is a culture, and moreover, I think people inside are aware of it on a conscious level. What do you think?

    1. tongorad

      That’s easy, they have class solidarity. No conspiracy, no unstated culture, just good ole class solidarity.

      1. jake chase

        The underlying problem is electronic money. There is so much available to those who sell out. Not to mention media worship, celebrity status, green jackets, dinner invitations, ….

    2. NotTimothyGeithner

      “or simply an unstated culture?”

      After Watergate, Republicans were trounced in nominal terms, but unofficially, the voters were anti-incumbent. Many idealized Democrats (pretty much saints compared to the vile today whatever their faults) chose not to run, partially because they had been in office for 10 or 12 years with the 1964 election. Because they came in a wave and not an organizing effort, they ignored the base of the party, and when the anti-incumbent and anti-Republican came, the right-wing Democrats prospered. This is when Terry MacAuliffe began their rise in party politics. Jimmy Carter oversaw a massive defense buildup, tax cuts on the rich, interest rate cuts, and declared a Monroe Doctrine over the Middle East.

      Jimmy Carter has been called too liberal for years by the Democratic elite and worriers, but Carter just represents the most liberal of this mutli-cultural/American myth right wing. Like most fascists, they aren’t deep thinkers, so they don’t even grasp how close they are or how shallow they are. They probably believe they are the extreme left short of operating Gulags in Alaska, but its a deep-rooted cultural issue protected by the tribalist Democrats who are most concerned with the “D” next to the name.

    3. wunsacon

      All of the above, IMO. More long-winded: It’s multiple conspiracies (that’s what “think tanks” and lobbyist groups are), a lot of short-term selfishness (found throughout nature — not just humans), our culture (as affected by many factors, including our luck of “inheriting” power from other empires that weakened themselves through repeated conflict and our desire and expectation to maintain our privilege), limits on the availability of information to every citizen, limits on every individual’s ability to discern fact from fiction, and historical and contemporary coincidences small and large.

  7. Susan the other

    I wonder what derivatives and swaps on tankers full of laborers from China and India will look like.

  8. ltr

    What is with this President? Simply no principles or character when it comes to representing the interests or needs of ordinary people as opposed to corporate interests. The Obama staff reflects the President.

  9. Max424

    Notes from the Buffalo Aboveground

    I was having a one-way conversation with this guy last night. For 20 minutes he was telling me how Obama was a punk-ass nigger half-breed with a million man Panther Army that was going to force him to scratch out a living in the bunghole of the American Dream.

    And, to add insult to injury, this all-powerful nigger-Muslim was going to take away his guns, too.* Because that’s what Israel-hatin’ nigger-Socialists do.

    Sincerely interested, I nodded pleasantly and attentively in agreement** and disagreement while he spoke, then said simply at the end:

    I’ll bet you five-hundred that this President, is in reality, a neo-liberal bank operative who will be worth at least 1 billion dollars no more than 3 years after he leaves office …and… that 95 percent of the adjustment money will come from US based Judeo-Christian captains of world capitalism and war.

    In other words, I got five-hundred says, it will be truly ALL-POWERFUL, NON-MUSLIM, NEO-LIBERAL AMERICAN WHITE MALE CRIMINALS that will make the ex-President rich from a small portion of their illicitly made billions and trillions.

    The guy didn’t even sniff the bet. Deep down, he knows (we all do). He’s just mad, and white.

    *Has a typical suburban man’s gun stash: a .22 caliber rifle, a 12 gauge shotgun (both micro-deadly weapons but not really Big Government stoppers), and a WWII era luger-in-the-attic that no longer works.

    Recently, it’s the twenty-two semi-auto that has become the bone in his craw, because he’s heard through the grapevine that the nigger-in-Washington is coming for his 10-clip.

    I told him, Get this right. Obama, all-powerful nigger or not, even if he wanted to, won’t be coming down your chimney looking to confiscate guns or clips, because you and your people dominate this issue at the Federal level. There, you have achieved, complete legislative blockage.

    Got it? So, a decade down the road, if you find yourself in the unlikely position of trying to stop a deadly intruder (slash family member) with a limited-by-three 7-clip, you can only blame some crazy initiative from Albany.

    And yourself, man. For crying out loud, don’t you listen to our Caucasian VP? Joe B. says, we should always reach for the 12 gauge when rousing ourself for home defense, not the semi-auto!

    **I certainly agreed with the American Dream/Bunghole part of the argument.

  10. Gene

    I must disagree with thse statements concerning her qualificatins. She has boobs and a latin surname, and having been raised on feminist propaganda, won’t even know that she is a useful ididot for the banstas.

    She is the fulfillment of the whole purpose of feminism, i.e., to create useful idiots in the place of competent professionals with a sense of integrity. Anne Barnhardt has had the courage to say so.

    1. sleepy

      No, what feminism did–at least in the realm of most politics–was to allow women-as-useful-idiots to compete equally with the men-as-useful-idiots.

  11. gozounlimited

    The Gensler who protected Jon Corzine in the MF Global collapse? Obama’s doing his job…………

    1. AbyNormal

      bahahaahahhaa i know i shouldn’t laff but our state of affairs is beyond ridiculous/dicless

      “I … continue to question whether Chairman Gensler was more concerned with protecting customers’ accounts or protecting himself from accountability,” Richard Shelby, who previously served as ranking member on the Senate Banking Committee, said in a statement.
      The report also faulted Gensler for communicating with his staff for work purposes using his personal e-mail account.

      The Chinese used gunpowder to make fireworks for celebrations, and the white man came along and said, Holy sh!t, we can use this to kill people. What better way to celebrate than that? kintz

      1. Yves Smith Post author

        1. Gensler didn’t protect Corzine, he recused himself, but after the approving the stupid BK type.

        2. What killed MFG was the repo to maturity. That didn’t sit in the CFTC supervised activities. That was an SEC fail (both Sarbox and financial reporting).

        Gensler did not cover himself with glory on MFG, but he’s been criticized for this more than is warranted. He has a generally very good record. My God, compare him to friggin Geithner or Mary Shapiro.

        1. AbyNormal

          Yves, i should of highlighted the portion reporting Gensler’s timing…by no means does this transgression compare to the list of Geithner & Shapiro corruption.

          WASHINGTON (Reuters) – The chairman of the U.S. derivatives regulator made a questionable call when he chose to distance himself from probing the demise of futures broker MF Global, the agency’s internal watchdog said in a report released on Tuesday.

          The findings by the inspector general of the Commodity Futures Trading Commission, Roy Lavik, were part of a broader report into whether the agency made any missteps into how it regulated MF Global.

          The report questioned whether it was proper for the CFTC chairman Gary Gensler to recuse himself from handling MF Global, which collapsed in 2011, after he played a prominent role leading up to its bankruptcy.


          “Seeking ethics advice only when the matter became a public sensation … was not the most desirable course,” Lavik said in the 72-page report. Gensler’s participation before requesting advice on the matter was “troubling,” it said.

          1. Yves Smith Post author

            He recused himself precisely because he was a former partner of Corzine’s. Hell, he might have even given money to his campaign. I don’t see how he could have NOT recused himself.

  12. sk

    Amanda Renteria seems to have mostly done assistant administrative type of work, there is hardly any finance or regulatory work.

    Amanda Renteria

    Senior Advisor, United States Senate
    January 2013 – March 2013 (3 months)

    Chief of Staff United States Senate
    2008 – January 2013 (5 years)

    Legislative Assistant/Legislative Director
    U.S. Senate – Senator Feinstein & Senator Stabenow
    2004 – 2007 (3 years)

    Special Consultant/Budget Analyst/Neighborhood Manager, City of San Jose
    2003 – 2004 (1 year)

    Economics/Math Teacher & Athletic Coach. Woodlake High School
    2000 – 2001 (1 year)

    Senior Financial Analyst Goldman Sachs
    1997 – 2000 (3 years)

    Amanda Renteria’s Education
    Harvard Business School, MBA, International, Social Enterprise, Public Sector
    2001 – 2003

    Stanford University, Honors Degrees in Poitical Science and Economics
    1992 – 1997

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