Derivatives Regulator to Be Sued by Wall StreetBanker Resource
November 27, 2013 — 1,200 views
The Obama administration has appointed Gary Gensler as the chief financial regulator for Wall Street and its banks. Gary Gensler was formerly employed by Goldman Sachs. He is now in charge of directing regulation and making recommendations that affect the financial sector and major banks.
Gary Gensler has made several radical recommendations that have caught the ire of the banks. Many banks fear that excessive regulation by Gensler might jeopardize their ability to freely conduct their business. They fear that their market freedom might be taken away from them.
Current Actions Taken by Banks
Currently the banks are issuing complaints and registering their grievances against the regulation. Most banks are refusing to comply with the guidelines that Gensler is issuing to them. Other banks are finding workarounds for most of the requirements that have been set upon them in recent years.
Most banks have been greatly affected by the actions of Gensler and have taken huge losses to their trading activities as a result. Some banks are even facing closure or bankruptcy because of this.
The Lawsuit by the Banks
All banks are planning to go ahead with a lawsuit against Gensler and his actions against the banks. The banks are planning the lawsuit next year in a New York court. The lawsuit will determine if the actions taken by Gensler were overreaching on his authority. The result of the lawsuit will determine the future course of action of the bank.
The lawsuit if it goes through could provide the banks with some breathing space. The banks desperately need the courts to decide in their favor. Their very livelihood depends on it. The banks have been doing business in this manner for a long time. It is very difficult for them to suddenly make a change in their strategy.
Future Course of Action
Depending on the result of the lawsuit, a lot could change in the future. The feds led by Gensler might have to make even more severe recommendations to implement their strategy. This could lead to more conflict between Gensler and the banks in the future. Right now, the only way out of this mess seems to be for the legislators to step in and make strong legislation taking the needs of both sides into consideration. The alternative is a lengthy legal battle that is not going to benefit either side. It is best to settle the matter out of court.