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Saturday, June 9, 2012

Banking Regulator: Congress Sides with Banks

According to Gary Gensler, head of the Commodity Futures Trading Commission, Congress stands with the big banks in the struggle to shield Americans from the risks and excesses of Wall Street. He pointed in particular to a proposal from the U.S. House’s Appropriations Committee to cut his agency’s funding by 12 percent. It is no accident in terms of the targeting that the CFTC had been given expanded powers by the Dodd-Frank Act in 2010. In particular, the agency was tasked with regulating the problematic $700 trillion market on derivatives—a task that dwarfs the agency’s regulatory power over futures. The question of what counts as a derivative was a magnet for bank lobbyists, and cutting the agency’s budget was one way to get Gensler’s attention—only he was pushing back in accusing Congress itself of being in the bankers’ corner.

                                   CFTC Chairman Gary Gensler staring down the big banks  

That the banking deregulatory movement had any traction at all after the financial crisis of 2008 is amazing, as is the fact that the banking lobbyists could use the U.S. House to propose staving a relevant agency. That the industry with a vested interest in rolling back regulations could have any influence over elected representatives—as if banks were citizens without being able to vote—was at the time an assumption that was generally taken for granted in the United States. Given the scale of the campaign contributions that the banks could make to candidates as well as to “independent” groups, it is no accident that the assumption was kept from being debated on the public airwaves. For the system to be less rigged, ordinary people would somehow have to question the engrained assumption themselves. This in turn assumes that the people are sufficiently educated to question assumptions on their own, so it is no accident that the U.S. House was also proposing cuts in education spending.


Alexader Eichler, “CFTC Head Gary Gensler: Congress ‘Sides With Wall Street’,” The Huffington Post, June 8, 2012.