President Donald Trump’s choice to chair the Commodity Futures Trading Commission said Wednesday he wants the CTFC to switch its focus from preventing a recession to spurring the economy.
“The time has come to reduce regulatory barriers to economic growth,” Christopher Giancarlo said at the Futures Industry Association’s annual conference in Boca Raton, Fla. “The American people have elected President Trump to turn the tide of over-regulation.”
The CFTC’s powers were greatly expanded by the Dodd-Frank Act in the aftermath of the 2008 collapse of the financial markets, which was blamed in large measure to under-regulation of derivatives.
A poster child of the crisis was AIG, which received a $180 billion federal bailout after its disastrous use of massive swaps trading brought it to the brink of insolvency.
But Giancarlo, a Republican member of the CTFC commission, said Dodd-Frank has made the derivatives markets more fragmented, more concentrated and less liquid, while the CFTC’s emphasis on tighter regulation to prevent another financial crisis has obscured its need to boost the economy as the recovery has sputtered.
“Every day Americans believe that Washington politicians and bureaucrats have gotten in the way of their ability to earn a living. They want the burdens removed so that they can build their dreams again,” Giancarlo said.
Showing his disdain for Dodd-Frank, Giancarlo said he would implement a wholesale CFTC regulatory reduction effort called Project KISS (Keep It Simple Stupid).
Under his direction, he said, the commission will review all CFTC rules to make them simpler and less burdensome.
The CFTC chair nominee promised fewer new rules, a return to greater care and precision in rule drafting, more thorough econometric analysis and longer public comment times for proposed regulations.
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Turning his attention to fintech, Giancarlo said the CFTC must be a leader in adopting the “do no harm” approach to financial technology, similar to the U.S. approach to the early internet.