Consumer Hedge Tear Sheet

CFTC Chairman Gary Gensler in the Wall Street Journal: Clearinghouses Are The Answer

Though Congress has taken great strides toward a comprehensive clearing requirement, various groups in the financial industry are appealing for one exemption after another. Firms that transact with derivatives dealers are concerned that clearing would raise their costs and are lobbying to be exempt from such a requirement. Additionally, as a result of the 2008 bailout, many believe that if their dealer fails the government will bail them out again, and thus there is no need to lower risk. The fundamental debate over exemptions boils down to deciding who should stand behind a derivative if one of the parties fails: a well-regulated clearinghouse or taxpayers.

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