From:
Aspen J. Levin
Organization(s):
ZAP, BBC, BHP, SIC
Comment Text:
I hope that this comment finds you well; I am writing to you to complain about the CFTC No-Action Letter Regarding the Merger of UBS Group and Credit Suisse Group marked as release number 9066-25 on your press releases section.
To begin, I appreciate that the initial merger was forced as such an action may have prevented an international financial crisis, kept Switzerland’s public perception as a reliable financial center intact, and disposed of eroding consumer sentiment directed towards Credit Suisse. However, since that merger completed in July of the previous year, UBS has had ample time, and a structurally sound financial ecosystem to manage and redistribute risky swap requirements, and the content of this letter by the CFTC heavily implies that UBS has failed to commit to such a task. My concern with the CFTC derives from the potential risk that by issuing this letter, the organization is actively encouraging malicious financial behavior by withholding to enforce necessary rules around swap clearance and uncleared margin requirements. There is a substantial lack of transparency within United Kingdom regulations that the United States possesses such as counterparty agreements. It should also be mentioned that the CFTC relief was granted via a non-public staff letter, rather than a full public rulemaking. The difference in the regulatory details and enforcement between the U.K. and the U.S. cannot be overstated enough, and with this Letter of No-Action, we could see other global banks sidestep U.S. rules and processes and request similar relief for restructuring.
While the request from UBS and press release from the CFTC stress that this situation is unique, I can’t help but wonder if this action sets precedent for all other G-SIBs and continually erodes the trust and safety placed by the Dodd-Frank Act. Essentially, this letter would give bad actors within our financial markets a green light to ignore rules and regulations designed to protect against over-leveraged positions. Such positions taken on by banks and investment firms in the past have led to the downfall of prominent figures such as Lehman Brothers, Archegos, and numerous others. The CFTC has a fiduciary responsibility to the American people and its markets to not condone excessive risk taking by ignoring evident rules on swap clearance and uncleared margin requirements. If I acquired $50,000 in risky credit card debt, I would trust that the banks and lenders would be responsible enough to not equip me with infinite liquidity. Because of these results carried out by past corporations and the irreparable damage they have caused, I believe that I have made my point clear for the CFTC to succinctly and immediately rescind the No-Action Letter.
Thank you for your time, and I hope that you understand the severity of withholding regulatory enforcement,
Aspen J. Levin
