Amid financial crisis, nobody's home at CFTC


CFTC Light on Leadership as Congress Drafts Regulatory Reform

By Sarah N. Lynch
Dow Jones Newswires
via, Paris
Wednesday, April 22, 2009

WASHINGTON -- Congress will soon draft sweeping reforms for the financial industry, but a lack of permanent leadership at the Commodity Futures Trading Commission limits the agency's ability to put an imprint on the new regulations.

Gary Gensler's nomination to head the CFTC is held up in the Senate. Meanwhile, the agency has an acting chairman, two commissioners with expired terms, one commissioner actively looking for a new job and a fifth seat vacant.

"The CFTC without a permanent chair is probably not a voice that is listened to as hard as it should be as the President's Working Group debates what this new regulatory landscape should look like," Futures Industry Association President John Damgard said. He added that some members of his organization are concerned the futures industry might be adversely impacted by regulatory changes being proposed by the U.S. Treasury Department.

Congress will this spring begin drafting legislation to create a systemic risk regulator and give the federal government the power to take over troubled firms -- including futures commission merchants -- that pose a risk to financial markets. Even if the Senate votes on Gensler soon, he would start his job rather late in the legislative debate.

The CFTC's fractured state is a sharp contrast from the Securities and Exchange Commission, which has all five commissioners in place. SEC Chairman Mary Schapiro, whose nomination was announced the same day as Gensler's, has said she may ask Congress to expand the SEC's power over credit-default swaps -- a financial instrument the CFTC also could oversee.

CFTC Commissioner Michael Dunn is serving as acting chairman and attending meetings on regulatory reform with the other financial regulators until a permanent chairman is installed.

Democratic Commissioner Bart Chilton's term expired last year, although he can serve until the end of this congressional session and could be nominated to another term. Republican Commissioner Jill Sommers' term has also expired, but she could be re-nominated and can serve until December 2010. Walter Lukken, a former acting CFTC chairman, previously said he plans to leave the agency this year.

Sen. Bernie Sanders, I-Vt., is one of the two senators blocking Gensler's confirmation. Sanders has said he is concerned about Gensler's past work at the Treasury Department on legislation that deregulated swaps and allowed commercial and investment banks to consolidate.

The Senate could vote to free up Gensler's nomination, but such a move takes a 60 vote supermajority and is reserved as a last resort for federal agency confirmations. A spokesman for Senate Majority Leader Harry Reid, D-Nev., said the White House is still working to reach a compromise with lawmakers concerned about Gensler's nomination.

"I'm starting to get concerned about the chairman's spot," CFTC Commissioner Sommers said. "I never would have guessed when he got nominated it would be almost the end of April and he wouldn't be here."

* * *

Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:

To contribute to GATA, please visit: