Gary Gensler's term as chairman of the U.S. agency writingregulations required by the Dodd-Frank Act for the global swapsmarket ends tomorrow. All the same, his ability to craft rules forcompanies including Goldman Sachs Group Inc. and JPMorgan Chase& Co. could extend at least until next year.

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Federal rules permit Gensler, a Democrat, to remain as chairmanof the U.S. Commodity Futures Trading Commission until the end of2013. If President Barack Obama loses re-election in November, hissuccessor could nominate a replacement as chairman earlier. WhiteHouse spokeswoman Amy Brundage declined to comment on whether thepresident will re-nominate Gensler.

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“It's a fight not worth having because he's in place for anotheryear,” said Mark Calabria, an economist and the director offinancial studies at the Cato Institute and a former senior aidefor Republicans on the Senate Banking Committee. Calabria said hewould be surprised if the administration formally submits Genslerfor re-nomination this year.

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“There is certainly at least one Republican if not dozens thatwould object to him,” Calabria said in a telephone interview.

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The CFTC is in the process of completing scores of regulationsrequired by the 2010 financial-regulation law that are designed toreduce risk and boost oversight of derivatives and swaps, whosenotional value is estimated at $708 trillion. Dodd-Frank wasenacted after largely unregulated swaps helped fuel the 2008 creditcrisis and contributed to the bailout of American InternationalGroup Inc.

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“I anticipate serving in this post well past April 13,” Genslertold reporters after a speech last month at the Futures IndustryAssociation conference in Boca Raton, Fla. “There is a lot of workwe have to do together in this administration to get these rulesfinalized.”

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The CFTC is trying to complete the rules by the end of the yearafter missing the law's July 2011 deadline. The agency has voted togive the industry “temporary relief” from Dodd-Frank rules that hadbeen scheduled to take effect. The delays were approved to give theagency more time to implement rules.

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The regulations are intended to have most swaps guaranteed byclearinghouses and traded on exchanges or other platforms.

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Gensler could face a difficult path to confirmation with 60votes necessary in the U.S. Senate. A single senator can also blockconfirmation by holding up a final vote. Democrats have criticizedGensler for failing to quickly adopt regulations limitingspeculation in oil and natural gas.

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Democratic Opposition

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“If CFTC Chairman Gary Gensler doesn't act soon to implementrules that will cut down on speculation in the oil futures markets,then you should consider not reappointing him,” Senator BillNelson, a Florida Democrat, said in an April 3 letter to Obama. Thespeculation rules, approved by the CFTC in October as part ofDodd-Frank, haven't taken effect in the market.

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Republicans have argued Gensler has overstepped the agency'sauthority under Dodd-Frank and has erred in his response to theinvestigation of MF Global Holdings Ltd., the New York-broker thatfiled for bankruptcy protection on Oct. 31. The CFTC, Securitiesand Exchange Commission, Justice Department and bankruptcy trusteeare investigating the collapse. The bankruptcy trustee hasestimated a $1.6-billion gap between customer claims and assetsavailable.

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Gensler decided against participating in the CFTC'sinvestigation because he said he didn't want his prior relationshipwith Jon S. Corzine, MF Global's former chairman and chiefexecutive officer, to be a “distraction” from the agency's work.Gensler and Corzine were colleagues at Goldman Sachs.

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“We want a person to come before us and answer the hardquestions. That's what your job is about,” Senator Mike Johanns, aNebraska Republican, told Gensler at a December congressionalhearing. “And it just feels to me like you're not discharging theresponsibilities of that job.”

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Bloomberg News

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