- The Washington Times - Monday, March 16, 2009

WASHINGTON (AP) - President Barack Obama’s choice to head the Commodity Futures Trading Commission, a nomination which raised concern among some lawmakers, cleared a hurdle toward Senate confirmation on Monday.

The Senate Agriculture Committee approved the nomination of Gary Gensler as chairman of the federal agency, sending it on to the full Senate. Though senators on the committee were polled individually, there was no customary vote count for and against, just a recording of no negative votes.

The nomination of Gensler to lead the relatively obscure agency has touched on key questions as Congress and the administration _ driven by the worst economic crisis since the 1930s _ prepare to tighten regulation of the financial markets and complex instruments. The concerns among lawmakers stem from Gensler’s actions as a Clinton administration official in an area blamed for aggravating the financial crisis _ the complex investments known as credit derivatives.

Gensler’s confirmation had been delayed by concerns voiced by Agriculture Committee Chairman Sen. Tom Harkin, D-Iowa, and others over what they have said was Gensler’s past deregulatory stance.

“With our current economic crisis, it is painfully clear that our nation’s financial system requires a much stronger and more effective regulatory scheme, and it is important that we have an effective leader at the Commodity Futures Trading Commission,” Harkin said in a statement Monday after the committee vote. “I am hopeful that (Gensler) will lead effectively in reforming and restoring regulation of trading in futures and other derivatives contracts.”

Gensler promised at his confirmation hearing before the committee last month to act forcefully and independently as a regulator. He said it was clear in retrospect that he and others in the Clinton administration “should have done more to protect the American public through aggressive regulation, harder regulation” of the financial markets.

The CFTC, which regulates futures and options trading in commodities like oil, natural gas and agricultural products as well as financial instruments, has become a focus of the public debate over putting government reins on the massive global markets for credit default swaps and other derivatives. Credit default swaps, a form of insurance against loan defaults, are traded in a secretive market valued at around $60 trillion. They figured prominently in the credit crisis that brought the downfall of Lehman Brothers Holdings Inc., a government rescue plan for giant insurer American International Group Inc., and the sale of brokerage icon Merrill Lynch & Co. to Bank of America Corp.

Gensler said he and other economic policymakers in the late 1990s had recommended tighter regulations in several areas and “we should have fought harder for them.” He testified that his views have “evolved” since then.

Gensler, who was an assistant secretary of the Treasury Department and later undersecretary for domestic finance, worked with Clinton’s Treasury Secretary Robert Rubin and then-Federal Reserve Chairman Alan Greenspan to keep credit default swaps away from regulation by the CFTC or the Securities and Exchange Commission.

Finance officials from rich and developing countries meeting in England over the weekend, including U.S. Treasury Secretary Timothy Geithner, agreed to tighten oversight of credit derivatives as well as financial markets and hedge funds. Obama has pressed for an overhaul of U.S. financial regulations to restore transparency and trust to the markets.

The Bush administration, as part of its own regulatory overhaul plan, proposed merging the functions of the CFTC _ which has only about 500 employees, the same level as in 1974 _ into the larger SEC. Decisions on the future powers of individual agencies will fall to Congress and the administration as they craft the financial overhaul.

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