Wall Street pro seeks confirmation to key financial commission

March 10--A Bergen County man seeking Senate confirmation as an appointee to the powerful Commodity Futures Trading Commission told a panel of lawmakers Thursday that he believes in financial regulation that is reasonable, data-driven and in proper balance with market forces.

Speaking to lawmakers publicly for the first time, J. Christopher Giancarlo of Haworth, a Wall Street securities lawyer, described himself to members of the Agriculture, Nutrition and Forestry Committee as hailing from a "line of nurses, physicians and small-business owners ... the children of immigrants who would beam with pride if they saw one of their own sitting here today."

Giancarlo, nominated last year by President Obama on the recommendation of Senate Minority Leader Mitch McConnell, is one of three nominees to fill vacancies on the five-member panel tasked with protecting the public from fraud, manipulation and abusive practices in the trading of commodity and financial futures, options and swaps.

The Commodities Futures Trading Commission's responsibilities were expanded by the 2010 Dodd-Frank law, and the rule maker and enforcer assessed a record $1.7 billion in fines in the past fiscal year as it also wrote and implemented rules to bring a $300 trillion swaps market out of the shadows and onto regulated exchanges and swaps execution facilities.

In his opening statement Giancarlo, a Republican, said problems in the swaps market, particularly at insurance giant American International Group, "helped amplify and spread

the financial crisis," and that he has been in favor of increased regulation of swaps since before that happened.

As an industry participant in the legislative debate over Dodd-Frank, he said he had called for central clearing of transactions and increased regulatory and marketplace transparency. "My support for these reforms is based not an academic theory or political ideology; it is based simply on my practical experience in the markets. But I am also a strong believer that vibrant, open and competitive markets are essential to a strong economy. Proper regulatory oversight can go hand in hand with open and competitive markets."

Timothy G. Massad, a Treasury official from Connecticut who was nominated by Obama to head the commission, and nominee Sharon Y. Bowen, a securities lawyer from , also spoke and were questioned by senators during a hearing that lasted about two hours.

The agriculture committee will make recommendations on whether the nominees should be confirmed to the full Senate, which will vote on the matter.

"The last time we met as a committee to confirm a new chair, we were in the middle of a financial crisis so deep that 8 million jobs were lost," said Sen. Debbie Stabenow, D-Mich., the committee's chairwoman. "Today the economy is adding jobs and our financial markets are getting safer, although we certainly have more to do on both accounts."

Giancarlo would take the seat of Jill E. Sommers, also a Republican, who stepped down in July.

Democrat Bowen would take the seat to be vacated by Bart Chilton, a Democrat

Massad would replace Gary Gensler, whose term as chairman ended in January. Democratic commissioner Mark P. Wetjen, former adviser to Senate Majority Leader Harry Reid, has been acting chairman.

Giancarlo, who grew up in Englewood, served in 2012 as chairman of the Wholesale Market Brokers' Association Americas Inc., which represents inter-dealer derivatives brokers.

Several senators expressed concerns about proposed position limits on certain trades, issues related to differences in how other countries regulate the global swaps market, and how new CFTC regulations will affect farmers and ranchers who use derivatives to hedge their financial risks. A couple of senators expressed dismay at the regulators' inability to prevent collapses of MF Global and Peregrine Financial Group.

Former broker-dealer MF Global, led by ex-New Jersey Gov. Jon Corzine, was ordered last year to pay $1.2 billion in restitution to customers who lost money when the company collapsed in 2011 after making bad bets on European debt.

Peregrine Financial Group had misused about $215 million of its customers' funds.

Giancarlo described the failure of the regulator to uncover those companies' problems sooner as a "black eye" for the CFTC.

"We have to make sure that does not happen again," he said.

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