Gary Gensler

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This article is about the American public official. For other uses, see Gensler (disambiguation).
Gary Gensler
Gary Gensler official portrait small.jpg
Chairperson of the Commodity Futures Trading Commission
In office
May 26, 2009 – January 3, 2014
President Barack Obama
Preceded by Walter Lukken (Acting)
Succeeded by Mark Wetjen (Acting)
Personal details
Born (1957-10-18) October 18, 1957 (age 57)
Baltimore, Maryland, U.S.
Political party Democratic Party
Spouse(s) Francesca Danieli 1986–2006
Children Anna
Lee
Isabel
Alma mater University of Pennsylvania
Religion Judaism

Gary Gensler (born October 18, 1957) is an American economic policy maker and former successful businessman, having served as the 11th chairman of the Commodity Futures Trading Commission, the Undersecretary of the Treasury for domestic finance, and the co-head of finance for Goldman Sachs.

Gensler has been described as a “force of nature,” who was “one of the leading reformers after the financial crisis.”[1] While serving as chairman of the CFTC, Gensler led the transformation of the $400 trillion over-the-counter derivatives, or swaps, market, while reorganizing the 700-person agency to be a more effective market watchdog. Gensler led the effort to pass and implement comprehensive oversight of the swaps market, which was at the center of the 2008 financial crisis. His tenure at the CFTC concluded on January 3, 2014.

Early life and education[edit]

Gensler was born in Baltimore, Maryland, one of five children of Jane (née Tilles) and Sam Gensler.[2] Sam Gensler was a cigarette and pinball machine vendor to local bars,[1] and he provided Gensler with his first exposure to the real-world side of finance when Sam would take Gensler to the bars of Baltimore to count nickels from the vending machines.[3]

Gensler attended Pikesville Senior High School, graduating in 1975.[4] His alma mater later invited Gensler to return to Pikesville, where he was awarded with the Distinguished Alumnus Award, to share his thoughts on leadership, where he encouraged the students to pursue their passions, make opportunities and seize them, find mentors, and find a good partner.[5]

After graduating from high school, Gensler and his identical twin brother[6] enrolled at the Wharton School at the University of Pennsylvania, where Gensler earned an undergraduate degree in economics, summa cum laude,[7] in three years, followed by a master’s in business administration the following year.[4] As an undergraduate, Gensler joined the University of Pennsylvania crew team as a coxswain, dropping his weight to 112 pounds to keep the boat at its proper weight.[4]

Business career[edit]

After earning an MBA, Gensler joined the Wall Street investment bank Goldman Sachs, where he spent 18 years working up the ranks.[8] At 30, Gensler became one of the youngest persons to have made partner at the firm at the time.[9] He spent the 1980s working as a top mergers and acquisitions banker, having assumed responsibility for Goldman’s efforts in advising media companies.[10] He subsequently made the transition to trading and finance[11] in Tokyo,[1] where he directed the firm’s Fixed Income and Currency trading.[10]

While at Goldman Sachs, Gensler led a team that advised the National Football League in capturing the then-most lucrative deal television history, when the NFL secured $3.6 billion deal selling television sports rights.[12]

Gensler's last role at Goldman Sachs was Co-head of finance, responsible for controllers and treasury worldwide.[13] In that capacity, he managed more than 500 people funding and accounting for a then-$250 billion enterprise. Gensler left Goldman after 18 years to enter public service,[14] when he was nominated by President Bill Clinton and confirmed by the U.S. Senate to be the Assistant Secretary of the Treasury.[7]

Public service[edit]

Treasury Department[edit]

Gensler served in the United States Department of the Treasury as Assistant Secretary for Financial Institutions from 1997-1999, then as Undersecretary for Domestic Finance from 1999-2001. As Assistant Secretary, Gensler served as a senior advisor to the Secretary of the Treasury in developing and implementing the federal government's policies for debt management and the sale of U.S. government securities.[10]

As Undersecretary of the Treasury for Domestic Finance, Gensler advised and assisted Treasury Secretaries Robert Rubin and Lawrence Summers on all aspects of domestic finance, including formulating policy and legislation in the areas of financial institutions, public debt management, capital markets, government financial management services, federal lending, fiscal affairs, government sponsored enterprises, and community development.[10]

While serving at the Treasury Department, Gensler was awarded the agency’s highest honor, the Alexander Hamilton Award, for his service.[7]

Sarbanes-Oxley[edit]

After leaving the Clinton Administration in 2001, Gensler joined the staff of U.S. Senator Paul Sarbanes, Chairman of the Senate Banking Committee, as a senior advisor and helped write the Sarbanes-Oxley law to tighten accounting standards in the wake of the Enron and [[WorldCom] scandals].[9] Sen. Sarbanes described Gensler as “a very good strategic advisor,” who “is very gifted at putting politics and substance together.”[9]

CFTC[edit]

Then-President-Elect Barack Obama nominated Gensler to serve as the 11th Chairman of the CFTC on December 18, 2008.[13] Though there was some opposition to Gensler’s nomination amongst the progressive members of the Democratic caucus,[9] Gensler was overwhelmingly approved by the U.S. Senate in an 88-6 confirmation vote.[15] Gensler was sworn in on May 26, 2009, pledging to work to “urgently close the gaps in our laws to bring much-needed transparency and regulation to the over-the-counter derivatives market to lower risks, strengthen market integrity and protect investors.”[16] According to Gensler, “[o]nly through strong, intelligent regulation – coupled with aggressive enforcement mechanisms – can we fully protect the American people and keep our economy strong.”[16]

Gensler has been credited with taking the CFTC - a once-sleepy and hands-off regulator[17] - and thrusting it into the front lines of reform.[1]

Swaps[edit]

As chairman of the CFTC, Gensler became one of the most feared regulators in Washington.[18] Former Chairman of the United States House of Representatives Committee on Financial Services Barney Frank referred to Gensler as “one of the best regulators I've ever seen.”[18]

During Gensler’s tenure at the CFTC, he worked closely with the Obama Administration, United States Congress and other regulators to transform the $400 trillion financial derivatives markets, markets that were at the center of the 2008 financial crisis.[18] Upon becoming chairman, Gensler immediately began leading the Obama Administration’s effort “to start policing the Wild West of finance: the murky market for over-the-counter derivatives.”[9] When the Treasury Department released draft legislation to bring regulatory oversight to the swaps market, Gensler sent a letter to Congress arguing that the proposal did not go far enough.[17] One reform advocate commented: “There’s a new sheriff in town.”[17]

Immediately after taking the helm of the CFTC, Gensler advocated for a three-prong approach to regulating swaps: (1) Bringing transparency to the markets through electronic trading platforms, (2) requiring that trades be processed through derivatives clearinghouses to lower risk to the financial system, and (3) for the first time, regulating the financial entities that deal in swaps.[19]

By the spring of 2010, the momentum in Congress was toward Gensler’s vision for derivatives oversight,[8] and Congress passed comprehensive reform as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act in July 2010.

After the passage of the Dodd-Frank Act, Gensler led the CFTC’s effort to write the rules required to regulate the swaps markets.[20] He oversaw the agency as it wrote 68 new rules, orders and guidances[21] and as its reach extended from a $35 trillion futures market to a $400 trillion swaps market.[1] He restructured the agency and re-committed the agency to a robust enforcement program. He focused on garnering consensus among his Democratic and Republican colleagues on the Commission, securing unanimous votes to approve more than 70 percent of the agency’s rulemakings.[1] By the time Gensler left the CFTC in January 2014, the agency was near completion of the rule-writing process to implement the Dodd-Frank Act.[22]

Enforcement and Libor investigation[edit]

In addition to managing the increased role of the CFTC in overseeing the swaps market, Gensler led a revitalization of the enforcement division of the agency, most notably in its prosecution of an enforcement case regarding manipulation of Libor, the London interbank offered rate.[23] According to Barney Frank, the CFTC had been “a toothless agency,” but when “Gary became chairman, he was very aggressive.”[23]

Early in his tenure, Gensler listened to tape recordings of two Barclays employees as they discussed plans to report false interest rates in an effort to manipulate Libor.[23] Libor is the average interest rate estimated by leading banks in London that the average leading bank would be charged if borrowing from other banks.[24] It is used as a reference rate for many financial products, including adjustable rate mortgages, student loans, and car payments.[3]

“A driving force behind the latest crackdown tied to LIBOR,”[3] Gensler worked with enforcement division director David Meister and his team to lead the investigative effort and brought charges against five financial institutions for the manipulation of Libor and other benchmark interest rates, resulting in more than $1.7 billion in penalties.[7] Barclays alone paid $450 million in fines as a result of the Libor investigation.[3] Gensler has called Libor "unsustainable" and argued that it should be replaced as a benchmark rate.[25]

Frankel Fiduciary Prize[edit]

For his work to reform the financial regulatory system, The Institute for the Fiduciary Standard awarded Gensler with the 2014 Tamar Frankel Fiduciary Prize.[26] In awarding Gensler the prize, John C. Coffee, Jr., Chairman of the Nominating Committee, said: “Gary Gensler is a modern profile in courage. The cause of curbing systemic risk has few natural allies, but the welfare of all Americans is at risk if this problem cannot be solved. Gary Gensler has been the strongest advocate of meaningful reform."[26]

Author[edit]

Outside of Gensler’s business and public service career, Gensler has co-authored a book with Greg Baer, a fellow Clinton Administration alum, The Great Mutual Fund Trap. The book uses empirical data to show that the average mutual fund consistently underperforms the market.[27] The book argues that actively-traded mutual funds carry high fees and lower-than-market returns, and investors should instead rely on low-fee index funds rather than constantly attempt to beat the market.

Political involvement[edit]

Gensler has been active in Democratic politics, having served as treasurer of the Maryland Democratic Party for two years,[4] and holding several senior roles on the Maryland campaigns of U.S. Senator Barbara Mikulski, former Lt. Gov. Kathleen Kennedy Townsend, and Gov. Martin O’Malley.[28] During the 2008 presidential campaign cycle, Gensler served as a senior advisor to Hillary Clinton’s presidential campaign and later advised the Obama campaign.[28] In May of 2015, Gensler was named chief financial officer of her campaign for the Democratic nomination.[29]

Personal life[edit]

Gensler lives in Baltimore with his three daughters, Anna, Lee and Isabel.[3] Gensler was married to filmmaker and honored photo collagist Francesca Danieli from 1986 until her death from breast cancer in 2006.[30] About his wife, Gensler has said: “Francesca’s magnificent art triggered the full range of emotions in those who experienced it. She was a beautiful woman with an incredible sense of style and grace. Everybody noticed Francesca.”[31]

Gensler is an avid runner who has finished nine marathons [1] and one 50-mile ultramarathon.[28] He also is an accomplished mountain climber, having summited Mt. Rainier and Mt. Kilimanjaro.[28]

References[edit]

  1. ^ a b c d e f g Protess, Ben (2 January 2014). "Regulator of Wall Street Loses Its Hard-Charging Chairman". Retrieved 28 October 2014. 
  2. ^ "Sam Gensler". 16 September 2012. Retrieved 28 October 2014. 
  3. ^ a b c d e Foroohar, Rana (24 December 2012). "The Money Cop; Gary Gensler got his start on Wall Street. Now he's cleaning it up--and taking on the biggest banking scandal since the financial crisis". TIME. Retrieved 28 October 2014. 
  4. ^ a b c d Hirschfeld Davis, Julie (3 November 2002). "The Democrats' stealth fighter". The Baltimore Sun. Retrieved 28 October 2014. 
  5. ^ "Remarks of Chairman Gary Gensler, Pikesville High School Distinguished Alumnus Assembly". http://www.cftc.gov/. CFTC. Retrieved 28 October 2014. 
  6. ^ "The Gensler Twins: Identical? Don't You Believe It". BloombergBusinessweek Magazine. 17 November 2002. Retrieved 13 December 2014. 
  7. ^ a b c d "Chairman Gary Gensler". http://www.cftc.gov. CFTC. Retrieved 28 October 2014. 
  8. ^ a b Scherer, Michael (22 April 2010). "An Ex-Goldman Man Goes After Derivatives". TIME. Retrieved 28 October 2014. 
  9. ^ a b c d e Wiseman, Paul (23 November 2009). "CFTC chief Gary Gensler is out to police financial Wild West". USA Today. Retrieved 28 October 2014. 
  10. ^ a b c d "President Clinton Names Gary Gensler as Under Secretary for Domestic Finance at the Department of the Treasury". The White House Office of the Press Secretary. Retrieved 28 October 2014. 
  11. ^ Fineman, Howard (22 April 2010). "Goldman Alum Who's Trying to Fix Wall Street". Newsweek. Retrieved 28 October 2014. 
  12. ^ Eichenwald, Kurt (19 March 1990). "Investment Bankers Play Football's Newest Position". The New York Times. Retrieved 13 December 2014. 
  13. ^ a b "President-elect Obama announces choices for SEC, CFTC and Federal Reserve Board". http://www.change.gov. Retrieved 28 October 2014. 
  14. ^ Protess, Ben; Bishop, Mac William (10 February 2011). "At Center of Derivatives Debate, a Gung-Ho Regulator". New York Times DealBook. Retrieved 28 October 2014. 
  15. ^ "Presidential Nominations". thomas.gov. Retrieved 1 November 2014. 
  16. ^ a b "Remarks of CFTC Chairman Gary Gensler Swearing-In Ceremony". http://www.cftc.gov. Retrieved 29 October 2014. 
  17. ^ a b c "Gary Gensler, derivatives cop". The Economist. 3 September 2009. Retrieved 29 October 2014. 
  18. ^ a b c Miedema, Douwe (3 January 2014). "Swaps regulator Gensler: banker turned Wall Street scourge". Reuters. Retrieved 27 October 2014. 
  19. ^ "Statement of Gary Gensler, Chairman, Commodity Futures Trading Commission, Before the Senate Committee on Agriculture, Nutrition and Forestry". http://www.cftc.gov/. Retrieved 29 October 2014. 
  20. ^ Nocera, Joe (15 November 2013). "The Little Agency That Could". New York Times. Retrieved 1 November 2014. 
  21. ^ Chon, Gina (30 December 2013). "Gary Gensler defends record as he leaves CFTC". Financial Times. Retrieved 13 December 2014. 
  22. ^ "Remarks of Chairman Gary Gensler before the ISDA European Conference". http://www.cftc.gov/. 
  23. ^ a b c Protess, Ben (12 August 2012). "Libor Case Energizes a Wall Street Watchdog". New York Times DealBook. Retrieved 29 October 2014. 
  24. ^ Bischoff, Victoria; McGagh, Michelle (6 February 2013). "Q&A: what is Libor and what did the banks do to it?". Citywire Money. Retrieved 28 October 2014. 
  25. ^ Masters, Brooke; Stafford, Philip (22 April 2013). "CFTC’s Gensler says Libor ‘unsustainable’". Financial Times. Retrieved 13 December 2014. 
  26. ^ a b "Gary Gensler, Former Commodity Futures Trading Commission Chairman, Wins Frankel Fiduciary Prize" (PDF). The Institute for the Fiduciary Standard. 4 August 2014. Retrieved 13 December 2014. 
  27. ^ "The Great Mutual Fund Trap: An Investment Recovery Plan". amazon.com. Retrieved 29 October 2014. 
  28. ^ a b c d McBride, Courtney (14 July 2013). "Gary Gensler, Chairman". National Journal. Retrieved 29 October 2014. 
  29. ^ "Hillary Clinton Hiring of C.F.O. Is Called Signal to Possible Donors". New York Times. July 3, 2015. 
  30. ^ Sullivan, Patricia (2 July 2006). "Filmmaker and Honored Photo Collagist Francesca Danieli, 52". Washington Post. Retrieved 28 October 2014. 
  31. ^ "Thank You Remarks of Gary Gensler before Play Pink on the Links; American Cancer Society". http://www.cftc.gov. Retrieved 29 October 2014. 

External links[edit]

Political offices
Preceded by
Walter Lukken
Acting
Chairperson of the Commodity Futures Trading Commission
2009–2014
Succeeded by
Mark Wetjen
Acting