New Jersey Native Nominated to take the Helm of the Commodity Futures Trading Commission

March 16,2017
the staff of the Ridgewood blog


Washington DC, President Donald Trump this week nominated New Jersey native J. Christopher Giancarlo to serve as chairman of the Commodity Futures Trading Commission .The commission regulates the derivatives market, a part of Wall Street that has been criticized for helping spur the financial crisis of 2008.

Giancarlo, who grew up in north Jersey and lives in Haworth in Bergen County, has served as a commissioner on the board since 2014 an acting commissioner since January.

Giancarlo was born in Jersey City, New Jersey. He attended Skidmore College in Saratoga Springs, New York where he graduated Phi Beta Kappa with Government Department Honors. Mr. Giancarlo received his law degree from the Vanderbilt University School of Law where he was an associate research editor at the Vanderbilt Journal of Transnational Law and President of the Law School’s International Law Society. Mr. Giancarlo has been a member of the Bar of the State of New York since 1985

He was nominated by President Obama on August 1, 2013 and confirmed by unanimous consent of the U.S. Senate on June 3, 2014. On June 16, 2014, he was sworn in as a CFTC Commissioner for a term expiring in April 2019. Mr. Giancarlo was designated per seriatim as Acting Chairman of the Commission on January 20, 2017.

Before entering public service, Mr. Giancarlo served as the Executive Vice President of GFI Group Inc., a financial services firm. Prior to joining GFI, Mr. Giancarlo was Executive Vice President and U.S. Legal Counsel of Fenics Software and was a corporate partner in the New York law firm of Brown Raysman Millstein Felder & Steiner. Mr. Giancarlo joined Brown Raysman from Giancarlo & Gleiberman, a law practice founded by Mr. Giancarlo in 1992 following his return from several years in London with the international law firm of Curtis, Mallet-Prevost, Colt & Mosle.

Mr. Giancarlo was also a founding Co-Editor-in-Chief of eSecurities, Trading and Regulation on the Internet (Leader Publications). In addition, Mr. Giancarlo has testified three times before Congress regarding the implementation of the Dodd-Frank Act, and has written and spoken extensively on public policy, legal and other matters involving technology and the financial markets.

Fresh on the heels of being nominated by the White House Tuesday to be Chairman of the US Commodity Futures Trading Commission, J. Christopher Giancarlo spelled out plans to reorganize the agency and “right-size” its regulatory footprint.

“The overly prescriptive regulation of American derivative markets is a part and parcel of the over-regulation of the US economy that thwarts revival of American prosperity,” he said in a speech prepared for delivery at the International Futures Industry conference in Boca Raton, Florida, Wednesday.

To carry out one of President Donald Trump’s executive orders of regulatory reform, Giancarlo announced the launch of an agency-wide review of CFTC regulations and practices “to make them simpler, less burdensome and less costly,” and said the CFTC will seek public comment on that effort.

The regulatory reform initiative, dubbed Project KISS for “Keep It Simple Stupid” will be led by Mike Gill, Giancarlo’s chief of staff, who will serve as the “regulatory reform officer.”

Arbitrary Nature of Financial Stability Oversight Council and the "Bail Out Nation "

March 6,2017
the staff of the Ridgewood blog

WASHINGTON DC, The House Financial Services Committee released a staff report which reveals that the Financial Stability Oversight Council (FSOC) acts inconsistently and arbitrarily in exercising its power to designate certain non-bank companies as “too big to fail.”

Based on documents requested by the Committee nearly two years ago and the sworn testimony of Treasury Department officials, both of which were only obtained as the result of a Congressional subpoena, the report shows that not only is FSOC’s analysis inconsistent, FSOC does not even follow its own rules—to the extent that FSOC even has rules that could be consistently followed.

“Today’s FSOC designations are tomorrow’s taxpayer-funded bailouts. The FSOC typifies Washington’s shadow regulatory system of powerful government bureaucrats, secretive meetings, arbitrary rules and unchecked power to punish enemies and reward friends,” said House Financial Services Committee Chairman Jeb Hensarling (R-TX). “The Obama Treasury Department tried to keep Congress and the American people in the dark about how FSOC exercises its sweeping powers. The release of this staff report brings some much-needed transparency and oversight to FSOC, and the information contained in the documents clearly demonstrates the need for the accountability reforms Republican have proposed in the Financial CHOICE Act.”

The staff report – which details the non-public analysis associated with FSOC’s processes to designate certain firms as so-called “systemically important financial institutions” and therefore “too big to fail” – comes in the midst of the FSOC’s appeal after a federal district court overturned FSOC’s designation of MetLife and characterized the designation as “arbitrary and capricious.”

In response to previous concerns that its designation process is arbitrary, FSOC has repeatedly stated that its analysis is based on “industry-specific and company-specific factors” without making clear what that meant in practice. But these documents bring to light that FSOC took into account certain factors when designating one company while refusing to consider those identical factors in the designation of another company.

One instance where FSOC did not treat two companies the same was its evaluation of a company’s vulnerability to material financial distress.

For the four nonbank financial companies that the FSOC designated as systemically important financial institutions (SIFIs), the FSOC did not evaluate the vulnerability to material financial distress of those companies. The FSOC has claimed in court both that it is not required to evaluate the probability or likelihood of material financial distress at a nonbank financial company, and that the FSOC’s own guidance does not state it will do so.

The Committee-obtained FSOC documents reveal that the FSOC evaluated the vulnerability of some companies to material financial distress – and then declined to designate those companies. The FSOC made multiple statements about the vulnerability to financial distress of some companies in their confidential evaluations such as “temporary market disruptions would be unlikely to threaten the imminent solvency” of a company, or for another company that its available liquidity resources “make it less likely for liquidity concerns and maturity mismatches to translate into a viable source of systemic risk.”

The FSOC’s documents neither explained this disparate treatment, nor was it explained to the court. This and other instances of disparate treatment of similar factors at different companies calls into question the entirety of FSOC’s analysis and its reliance on “company-specific” qualitative factors as justification for its designations.

These documents also show that the FSOC does not follow its own rules for the nonbank designation process. The FSOC says that it will “assess the impact of the nonbank financial company’s material financial distress in the context of a period of overall stress in the financial services industry and in a weak macroeconomic environment.”

But the documents that are discussed in the staff report detail a number of companies where the conclusions reached by the FSOC were made based on a scenario of the company failing “in isolation,” as opposed to reaching its conclusions in a scenario where there are “developments that cause distress at [the company] and other firms simultaneously.”. These companies were not designated by the FSOC. The reason the FSOC did not follow its own rule was not explained in the documents or the testimony of Treasury officials.

The Financial CHOICE Act – the Republican plan to replace Dodd-Frank and promote economic growth – includes provisions that eliminate FSOC’s authority to designate certain firms as “too big to fail” and rescinds previous FSOC designations. In addition, the CHOICE Act would require the FSOC to operate with a higher degree of transparency and inclusiveness.

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House Financial Services Committee Chair Issues Warning on SEC refusal to stop “midnight regulations”

December 14,2016
the staff of the Ridgewood blog

Ridgewood NJ, House Financial Services Committee Chairman Jeb Hensarling (R-TX) issued the following statement concerning SEC Chair Mary Jo White’s refusal to stop “midnight regulations” in the waning days of the Obama Administration:

“The press is characterizing Chair White’s decision to try to rush through a mountain of midnight regulations as ‘defying Republicans,’ but in reality she’s defying the will of the American people and good government. Such midnight rulemaking is neither conducive to sound policy nor consistent with the principles of democratic accountability. The American people chose a new direction for our country, and the incoming Trump Administration and Congress should have the opportunity to review pending regulations and fully assess their costs and benefits. As the clock runs down on the Obama Administration, Chair White and all other regulators who may be tempted to hastily impose another pile of complicated regulations on our economy should know that Congress will scrutinize their actions and – if appropriate – overturn them.”

Mary Jo White has already announced plans to step down as chair of the powerful Securities and Exchange Commission before President-elect Donald Trump takes office.White’s term at the helm of the SEC hadn’t been scheduled to expire until June 2019.

House Committee Approves Garrett Promoted Financial CHOICE Act to end Corporate Bailouts

September 14,2016

the staff of the Ridgewood bog

Washington DC, Legislation to end bailouts for big banks, toughen penalties for wrongdoing on Wall Street, promote economic growth, and provide desperately needed regulatory relief for small community banks and credit unions passed the House Financial Services Committee 30-26 today.

The legislation – the Financial CHOICE Act – ends the Dodd-Frank Act’s taxpayer-funded bailouts of large financial institutions; relieves banks that elect to be strongly capitalized from growth-strangling regulation that slows the economy and harms consumers; imposes tougher penalties on those who commit financial fraud; and demands greater accountability from Washington regulators.

“Democrats just voted against a bill that increases penalties against those who commit financial fraud. They just voted against a bill that ends taxpayer-funded bailouts, and they just voted against legislation that provides relief from Washington’s crushing regulatory burden for small banks, credit unions and consumers,” said Financial Services Committee Chairman Jeb Hensarling (R-TX), the sponsor of the bill.

“The bill holds Wall Street accountable with the toughest, strongest, strictest penalties ever – far greater than those in Dodd-Frank. And as recent headlines attest, obviously stronger penalties are needed. It requires banks to be well capitalized to prevent another financial crisis and puts in place the toughest penalties in history to protect consumers from fraud and deception.

“The Financial CHOICE Act will help grow the economy for all Americans, not just those at the top. It promotes strong and transparent markets to revitalize job creation in our poorest communities and ensures every American has the opportunity to achieve financial independence, no matter where they start out in life.”

The Financial CHOICE Act, which stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs, received strong support from community banks and credit unions, small business groups and conservative organizations. Large financial institutions did not offer their support for the bill.

Democrats on the Committee – despite having spent months criticizing the Financial CHOICE Act – refused to offer a single amendment to the bill.

For more information on the Financial CHOICE Act, visit www.financialservices.house.gov/choice/.

Organizations offering praise for the Financial CHOICE Act include the following:

“The [Financial CHOICE Act] would provide meaningful regulatory relief to help community banks foster economic and job growth in their local communities.” — Independent Community Bankers of America

“This bill provides significant regulatory relief essential to restoring economic growth. Republican members of Congress have repeatedly promised to get rid of Dodd-Frank and stop taxpayer funded bailouts. Now they have the opportunity to fulfill that promise by bringing the Financial Choice Act to a vote in the House and Senate, and sending the bill to the President’s desk.” — Heritage Action

“Chairman Hensarling’s CHOICE Act would be a win for Main Street consumers, workers and small businesses. Since Dodd-Frank was passed in 2010, access to free-checking has decreased while lobbyists’ importance has increased. The CHOICE Act helps reverse this trend.” — Main Street Growth Project

“Americans for Prosperity applauds your leadership in reining in the overbearing financial regulations that threaten growth and threaten consumer financial stability. Repealing and replacing the failed policies established in the Dodd-Frank Act will mean that Americans will have greater access to capital, which will lead to greater job growth, personal wealth, and overall economic prosperity. We are proud to support the CHOICE Act, and we urge your colleagues to support it.” — Americans for Prosperity

“….[the Financial CHOICE Act] is precisely the right combination to get the American economy moving again. The CHOICE Act offers sensible regulatory relief for qualifying institutions, protects the American taxpayer and consumer from another Wall Street meltdown, and holds federal financial regulatory agencies accountable.” — Independent Bankers Association of Texas

“….several components of this legislation target reforms specifically to facilitate investment in small business. The inclusion of these provisions and others will provide regulatory relief and modernization that will allow the private sector to fuel economic growth in our 21st century economy.” — Small Business Investor Alliance

“This is an important bill that will truly reform rules governing the financial system, encourage innovation across the system, vastly improve access to capital for entrepreneurs and small businesses, and transform a regulatory structure that lacks accountability, is too secretive, and ignores its responsibilities concerning small businesses.” — Small Business & Entrepreneurship Council

“We greatly appreciate the Chairman’s efforts in Title III of the bill to reform the Consumer Financial Protection Bureau (CFPB or Bureau). This title will help to ensure the Bureau serves as a non-partisan regulator that operates within the framework of the law by giving Congress more oversight authority, taking into account the opinions of all stakeholders, and properly weighing the impact its regulations have on the availability of credit.” — Consumer Bankers Association

“NAR is pleased that the FCA [Financial CHOICE Act] includes provisions that will enhance transparency, accountability and fairness in our financial system. As a result, the FCA will help expand financial product choice and promote economic opportunity. These provisions are an important step towards making property ownership a reality for hardworking Americans and U.S. businesses.” – National Association of Realtors

“If we want the economy to improve — if we want to give all Americans the chance to prosper again — we need to put an end to Washington’s destructive regulatory agenda once and for all. Thankfully, an increasing number of elected officials in Washington are fighting against the harmful effects and unintended consequences of these onerous regulations. Leading the fight in Congress has been House Financial Services Committee Chairman Jeb Hensarling (R-TX), who recently outlined a comprehensive plan to turbocharge the American economy. His new legislation, The Financial CHOICE Act, aims to curb regulations to create opportunity and choice for investors, consumers, and entrepreneurs nationwide.” — Conservative Coalition Letter of Support

“If signed into law, the bill would end the era of too big to fail, and would move banking and financial decisions away from Beltway and back to Main Street. This bill is balanced, meets key conservative criteria, and should continue to move through the House to final passage.” — FreedomWorks

“….[the Financial CHOICE Act] would begin the process of implementing sensible, necessary reforms to the U.S. financial system. That system has been saddled with an ineffective regulatory structure and an array of conflicting legislative and regulatory requirements that, individually or collectively, constrain growth. The Chamber believes the Financial Choice Act is a positive first step for unlocking the capital markets to better facilitate the financing of America’s economic growth and job creation.” — U.S. Chamber of Commerce

“….the CHOICE Act offers a strong alternative to Dodd-Frank and the regulatory morass it created. Rather than creating a flurry of complex rules in response to the financial crisis, Congress should have mandated higher capital requirements for financial institutions. That is why NTU is enthusiastic about the CHOICE Act’s “off ramp” from the bulk of the current Dodd Frank regulatory regime.” — National Taxpayers Union

“….the CHOICE Act and the substantial regulatory relief it provides…will generate meaningful economic and job growth in our communities.” — Mid-Size Bank Coalition of America

“….[the Financial CHOICE Act] address[es] the challenging credit conditions that home builders and home buyers continue to experience as a result of an overly zealous regulatory response to the financial crisis. NAHB appreciates your efforts to initiate regulatory reform to support a more robust recovery.” — National Association of Home Builders

“….it is vital that we take heed of any policy that claims to “fix” the voluntary actions of consumers. Price controls go against everything we stand for as a country and do nothing but redistribute wealth, damaging the lives of hardworking Americans. The first step forward is reform. The Financial CHOICE Act is that first step.” — Red State

“….the Financial Choice Act if passed will restore competition in the marketplace by removing arbitrary government price caps. Additionally, it will allow banks the ability to recoup the money they spend on fraud protection from the retailers that reap the benefit of the use of debit cards. Consumers will once again have affordable access to basic banking services, and small businesses will have the freedom to negotiate processing fees that make sense based on the type of goods they sell. In short, all true conservatives in Congress should rally behind Neugebauer and Hensarling’s bill, because it will cut back on big government red tape and allow the free market to thrive again.” — Liberty Unyielding

http://theridgewoodblog.net/house-committee-approves-garrett-promoted-financial-choice-act-to-end-corporate-bailouts/