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By Christopher Doering
September 26, 2011 5:00 PM EDT
Nearly a year after launching ambitious reform plans, the top cop for U.S. futures markets, Gary Gensler, is beset by dissent from inside his agency and political attacks from outside it.
In the last two months, signs of friction within the U.S. Commodity Futures Trading Commission have spilled into public view: internal complaints by whistleblowers, and the surprise release last Thursday of a key position-limit rule by Reuters. The leak of confidential trading data has also caused waves.
The strains are not necessarily surprising for an agency that has been thrust from relative obscurity into the forefront of sweeping reforms, and is now undertaking an overhaul of derivatives trading without the big increase in funding and additional staff it is seeking.
Nonetheless, internal discord may be the biggest challenge yet for Gensler, the 53-year-old marathon runner who is sprinting to finish a new regulatory framework for the $600 trillion over-the-counter derivatives market.
And it is heating up as the CFTC draws closer to finalizing the most controversial and important rules that could force Wall Street firms to change the way they do business.
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"What it tells you is there's a fair amount of acrimony within the commission on these issues," said one lawyer, noting the whistleblower complaints .
The discontent in some ways stems from the top. CFTC commissioners have openly disagreed on what the rules should look like, and the best way to put them into effect. Increasingly, some commissioners have spoken out about being left in the dark about what is going on at their own agency.
It now appears to be trickling down to lawyers, economists and others tasked with finishing the rules on which they have been working nonstop for nearly a year, and have at least six more months to go.
Jill Sommers, a Republican CFTC commissioner who has opposed a number of the rules, told Reuters on Friday she was frustrated by a lack of communication to agency commissioners about things going on at the CFTC.
"It's frustrating that we find things out third hand," Sommers said. "I understand there are a lot of different things being juggled and we have limited resources at the commission, so I'm sensitive to that, but I would guess there is a better way to keep us all on the same page."
One example was a Senate Republican aide who told Reuters last Friday that CFTC Inspector General A. Roy Lavik would investigate the whistleblower complaints on the position-limit rule. Sommers said she had not been told of the investigation.
Earlier this month, whistleblowers expressed concern at internal strife in the CFTC over how to craft a workable rule to crack down on speculation in oil markets. They asked the agency's inspector general to step in.
A second senior regulations lawyer, who like many others requested anonymity, added: "There's insurrection at the commission, evidently."
Gensler, a former Goldman Sachs executive who regularly puts in late nights and long weekends, also has been driving his staff toward the finish line on reforms that he largely helped craft, likely adding to the agency's tensions.
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