Gensler Speaks on Making Lists and Regulatory Philosophy (with Lofchie Comment)

CFTC Chairman Gary Gensler spoke at the Wharton Leadership Lecture Series, providing advice to Wharton students regarding leadership and experience. A couple of his remarks were notable as to his regulatory philosophy:

"Fourth, every time you take on a new role, right at the beginning, articulate one clear goal and write it down on a Post-it note.During my first year at the CFTC, we set out a strategy of advocating that Congress enact comprehensive regulatory reform of over-the-counter derivatives, or swaps. Our tactics included giving speeches, providing Congress with legislative and technical assistance, placing opinion pieces in leading newspapers and actively working with coalitions of supporters outside of Congress.Once Congress finalized financial reform in the Dodd-Frank Act, at the CFTC we had to find a way to write and implement more than 60 new rules, though the agency was gravely underfunded and had never completed more than five rules in a year. We went after every gating factor we could find to move such a significant amount of reform "inventory." We set up an entirely new team structure, new means of public openness and methods of outside regulatory consultations. Now we've nearly completed writing all the new Dodd-Frank rules, and financial institutions are coming into compliance with this new regulatory infrastructure. This would not have been possible had we not removed the gating factors at the CFTC."

See:CFTC Chairman Gensler's Speech.See also: Commissioner O'Malia Criticizes CFTC Rulemaking and Implementation (with Lofchie Comment).

Lofchie Comment: Chairman Gensler's speech seems very much consistent with his regulatory philosophy, and with the direction that the CFTC has taken. This makes it important to ask whether that philosophy is consistent with the role that the CFTC, or that any regulator for that matter, should take.By way of example, what are the "gating factors" that the CFTC has removed from its rule-making progress? In a speech last week, Chairman Gensler's fellow Commissioner O'Malia asserted that the CFTC had not fulfilled its responsibility to conduct cost-benefit analyses, and that many of the rules that the CFTC had adopted were materially flawed, resulting in the CFTC issuing more than two no-action letters for each rule that it had adopted. These are arguably among the negatives to the Chairman's regulatory philosophy.