The Gensler-Chilton Step Down...

Both are stepping down. Fresh on the heels of position limit and entity aggregation rules. (More on that later).

I’ll get on my soapbox for a minute. The biggest risk for poor outcomes in commodities and derivatives regulation is regulators who do not understand the nuanced details of these products. When you cross complex products with complex regulations, it drives home the need for commissioners who are capable of synthesizing the labyrinthine gauntlet of complex product v. complex regulation. Ok, that’s it.

Chris Giancarlo (R) is most likely taking Jill Sommer’s seat. Not a done deal but Giancarlo has apparently been fully vetted. Still has to get through the confirmation process.  But he seems to have some decent commodities credentials, which is (in our opinion) a pre-requisite for the job.

Timmothy Massad (D):  Massad is the Assistant Secretary of the Treasury.  Great credentials in financial services. It seems like the Obama administration is putting him up to take Gensler’s role as Chairman. Massad has a great reputation around TARP.  But unfortunately is a “complete blank on commodities and derivatives regulation”- WSJ Here  UPDATE:  Masad got nominated to take on Gensler’s role yesterday (Nov 13, 2013)

Elizabeth Ritter (D): Ritter is the Chief of Staff and Senior Legal Counsel to Chilton. She’s been at the CFTC since 1988. As Chilton put it here:

“[S]he has been a dedicated public servant for her entire career. Nobody in the world knows U.S. derivatives law like she does. It’s been an honor and privilege to work with her for the past seven years.”  Ritter has a lot of experience at the CFTC running interdisciplinary teams of lawyers and economists. Of the whole lot she probably has more commodities & derivatives experience than all the nominees put together.

Sharon Bowen (D):  A securities lawyer at Latham & Watkins, her name is being thrown around a bit. While her LW profile does not indicate much background in commodities or derivatives (here), it seems that she has had a fair amount of success on the board of SIPC. While undoubtedly very intelligent and dedicated, she just has no practical commodities and derivatives experience.

So that’s the rundown. Who knows how this Senate will piece through it or what kind of horse trading will deliver the results. Stay Tuned.