Just Say: “I Screwed Up”

Just Say: “I Screwed Up”

In my column, Never Say You’re Sorry, I wrote about Gary Gensler, the Obama administration’s nominee to head the Commodity Futures Trading Commission. Yesterday the Senate Agricultural Committee held hearings on the nominee, and Laura Dean was there. She sends this dispatch:

“I will stand up and say I made a mistake,” declared Rep. Kent Conrad, with a hard look toward Gary Gensler. “All of us need to ‘fess up.” Conrad was referring to the Commodity Futures Modernization Act of 2000 (of which Gensler was a vocal advocate) that mandated that credit default swaps remain unregulated and led in part to the current economic crisis.

Rep. Tom Harkin had tried a different tack earlier in the afternoon when he quoted Gensler’s own testimony from May 18th 1999, “I positively unambiguously agree” with Larry Summers in opposing this regulation.

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In my column, Never Say You’re Sorry, I wrote about Gary Gensler, the Obama administration’s nominee to head the Commodity Futures Trading Commission. Yesterday the Senate Agricultural Committee held hearings on the nominee, and Laura Dean was there. She sends this dispatch:

“I will stand up and say I made a mistake,” declared Rep. Kent Conrad, with a hard look toward Gary Gensler. “All of us need to ‘fess up.” Conrad was referring to the Commodity Futures Modernization Act of 2000 (of which Gensler was a vocal advocate) that mandated that credit default swaps remain unregulated and led in part to the current economic crisis.

Rep. Tom Harkin had tried a different tack earlier in the afternoon when he quoted Gensler’s own testimony from May 18th 1999, “I positively unambiguously agree” with Larry Summers in opposing this regulation.

But no amount of brow-beating from the senators could get Mr. Gensler to admit that he might have made an error in judgment. Gensler’s refrain remained that this crisis was a “dot on the horizon;” something no one could possibly have foreseen. Somewhat puzzlingly though, Gensler insisted, “we should have fought harder for regulation” and “for some of the things we suggested at the time.” I don’t think I was the only one in the room wondering which “we” Mr. Gensler was referring to. Which Gary Gensler was this that had been a soft-spoken advocate of regulation all along?

Better foresight will be particularly important for the next CFTC commissioner with the forthcoming creation of a cap and trade system that, as Rep. Stabenow pointed out, “will create the largest derivative market in the world.” The next commissioner will be charged with regulating an entirely new market. Yet while Gensler was quite adamant that a cap and trade system should fall under the jurisdiction of the CFTC, he was unable to address any of the specifics such a plan might entail.

In an argument that he and his supporters ground in personal rather than professional history — he “brings values,” said Sen. Mikulski. “He’s committed to our community,” said Sen. Cardin — one wonders why a simple “I’m sorry” is so difficult. Could it be that he doesn’t think he made a mistake, that this situation really was unavoidable? If so, this raises serious concerns about the vision of a man who might have to make some pretty far-sighted decisions in the coming years.

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