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AFR Statement: JP Morgan Losses, Global Derivatives Regulation, and Today’s Speech by Gary Gensler

Submitted by on May 21, 2012 – 9:48 am


FOR IMMEDIATE RELEASE                                                                                                                                                                                                                                                                   

May 21, 2012  


CONTACT: Erin Kilroy at 202-466-1885



AFR Statement on JP Morgan Losses, Global Derivatives Regulation, and Today’s Speech by Gary Gensler

Washington DC – The massive losses in JP Morgan’s London office are demonstrating yet again that what happens in the overseas offices of US banks can have a direct impact on the U.S. economy.  This was already obvious from past experiences such as the taxpayer bailout of AIG’s European derivatives operations in 2008. But this experience has not kept big Wall Street banks from lobbying hard  to exempt derivatives transactions in their foreign subsidiaries from new transparency and accountability rules in Dodd Frank. Such a loophole would be a major blow to financial reform. Unfortunately the bank lobbying effort has had some success with lawmakers.

Today CFTC Chairman Gensler, in his speech to the Financial Industry Regulatory Authority (FINRA) underlined his view that Dodd Frank requires strong oversight of foreign subsidiaries. We are much encouraged by his arguments, which support the view that exempting thousands of foreign subsidiaries of Wall Street firms from U.S. regulation would make it impossible to realize the goals of financial reform. While a full assessment of the CFTC’s international oversight rules must wait for the detailed rule to be released, we view this basic principle as of fundamental importance.