Gensler tells Thune reforms would squash "excessive speculation"

The new chairman of the Commodity Futures Trading Commission, Gary Gensler, went before the Senate Ag Committee Thursday to discuss the administration’s views on reform andregulation of derivative markets. Over-the-counter derivatives and excessive speculation of futures markets are blamed, in part, for the nation’s financial crisis and the wildly high commodity prices last year. Gensler says reform and regulation would focus on derivatives dealers and the marketsthemselves. Senator John Thune of South Dakota asked Gensler how such reforms would protect Iowa, South Dakota (and all) producers from excessive speculation, “We might see a resurgence of these commodity prices and that’s why I’ve already directed staff to really lay out for me as chairman andthe commission all the options that are available under current authorities to guard against this.”

Gensler told Thune he’s aware of the needs of producers, “I look forward to working with you because I know these things are critical to your constituents. I mean,we have to get everything to work in the wheat markets and the grain markets as well. And I know that’s been a challenge, too, and we’ve got to focus on that.”
And when asked whether the CFTC would be merged with the Securities and Exchange Commission (SEC), Gensler said that’s nota priority in dealing with the financial crisis, “If Congress and the president laid out why that would really help the American public, we’d all, I think, want to work with that. But I don’t see it, really, in the lead here of the reasons and I don’t think it’s going to accomplish much for theAmerican public today.”

Committee Chairman Tom Harkin says it’s crucial to protect the public by making sure the markets “manage risk rather than magnify risk.”

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