Guarding the Henhouse
Fineman, Howard, Newsweek
Byline: Howard Fineman
A Goldman alum turns Wall Street overseer.
Growing up in Baltimore in the 1960s, Gary Gensler learned about business and politics and how they are related. His father owned vending machines, and Gary would accompany him to bars in rough neighborhoods as he poured coins into a nickel-counting machine in his car. Businessmen such as Sam Gensler needed--and attracted--politicians. The former wanted to stop ever-rising taxes on cigarettes; the latter wanted loyalty and support. The elder Gensler would go to Annapolis to lobby the legislature and return home with hair-raising tales of the scene. "It wasn't pretty," Gary recalls. But it was thrilling to hear about the dance of political power and profit, the tango at the heart of American life.
And so it's not surprising that Gary Gensler has been in that dance--but at a far higher level--since he was 21. A former partner at (where else?) Goldman Sachs, he later served in Bill Clinton's Treasury Department. In 2008 he joined scores of other Goldman partners and alums in giving nearly $1 million to the Obama campaign, and he is one of a raft of Goldmanites to have joined the new administration. Now, as chair of the obscure Commodity Futures Trading Commission, he is arguably the key player in the drive to bring order and sunlight to the murky casino that is Wall Street. If the financial-reform bill in Congress passes--and it looks like it will--the CFTC will acquire vast new powers. It will oversee markets in derivatives and swaps that, on paper, are worth hundreds of trillions of dollars and that generate some $25 billion a year in profits for big companies such as Goldman Sachs. It's only a slight exaggeration to say that the central question about whether reform will work is this: can we trust this guy?
I went to his office in a drab Washington building to get a sense. A marathoner and mountain climber, Gensler, 52, is a slight and wiry fellow with the wide, unblinking gaze of a gecko. He is known in New York and Washington as a tough customer. As a top mergers-and-acquisitions banker at Goldman in the 1980s, his job was to outbid and undercut CEOs and boards of directors desperate to hang on to their jobs. "He can get in your face and doesn't back down," a fellow investment banker told me. After M&A, he switched to trading and finance--now the most dominant and riskiest moneymaker for the biggest firms. …