President Obama’s nominee for the Commodity Futures Trading Commission (CFTC) Wednesday urged Congress to give the agency “more tools” to deal with abuses in the futures markets.

“I absolutely believe the CFTC needs more tools. I believe it has to be a tough cop on the beat and strong in enforcement,” Gary Gensler said during his confirmation hearing before the Senate Agriculture Committee.

“We need more resources to do that…The enforcement wing itself [had] 150 lawyers, which shrunk to 110” during a period in which the futures markets increased sixfold in volumes, Gensler said. He further noted that the current CFTC staff level (500) is the same as it was in 1974. The agency, Gensler said, has put in a request to increase the staff to 690.

“But beyond that I believe that we do…have a broad agenda, if I’m confirmed, to try to get additional authorities to address some of the very real issues in the agriculture and energy markets and [the] over-the-counter markets to control some of the excesses that we’ve seen,” he told the Senate panel.

Gensler believes that the CFTC should “bring the whole over-the-counter derivatives [market] into the regulatory regime with centralized clearing and exchanges.” As for credit default swaps, which are blamed for the credit crisis, Gensler said they “raise an additional set of unique challenges” (see Daily GPI, Feb. 6).

He made clear that he believes the CFTC has “exclusive jurisdiction from Congress to regulate the futures market.” Gensler said the agency is “best situated among federal regulators” to address abuses in the futures market.

The full Senate will vote on Gensler’s nomination after it is cleared by the Senate agriculture panel.

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