Tag: Senate

Senate Confirms Three New CFTC Commissioners

The US Senate Monday voted to approve the nomination of three new commissioners to the CFTC, including Timothy Massad, who will replace Gary Gensler as CFTC chairman. Mr. Massad had served from 2011 to October 2013 as the Assistant Secretary for Financial Stability at the Treasury Department and has overseen the Troubled Asset Relief Program created in response to the 2008 US financial crisis.

In addition, the Senate approved the nominations of Sharon Bowen and Christopher Giancarlo to serve as CFTC commissioners. While both Mr. Massad and Mr. Giancarlo were confirmed by voice votes, the Bowen’s confirmation proved more controversial, and she was ultimately confirmed by a 48-46 vote. Criticism of Ms. Bowen came mainly from the of the political spectrum, with Republican senators criticizing her role in overseeing a panel that denied compensation to victims of a $7 billion ponzi scheme.

The three new regulators will join Commissioners Mark Wetjen and Scott O’Malia on to fill out the CFTC’s five-member panel to continue the implementation of Dodd-Frank regulations begun under the oversight of Mr. Gensler.

Commissioners Unhappy With CFTC No-Action Letters

Several commissioners have spoken out over the CFTC’s no-action letters, claiming that many of them were instituted hastily, leaving little time to review or edit them.

The Commodity Futures Trading Commission has put in place almost 70 rules since the 2010 regulatory reform law was put into place. Of these rules, 36 were related to Dodd-Frank. However, within these 36 rules, over 200 no-action letters or other forms of guidance have had to be issued after the rules were instituted.

Some commissioners have defended the CFTC no-action letters, saying that their use was inevitable, as overhauling the operations of the $600 trillion dollar derivatives market is no small task. As former commissioner Micheal Dunn explained it to Risk.net, “You can’t make an omelette without breaking some eggs.”

Most commissioners agree that some no-action letters will be necessary. However, it seems for many commissioners, the issue revolves around how the CFTC no-action letters were instituted.

Commissioners have pointed out that while some of the no-action letters are only temporary, quite a few of them are indefinite or permanent. Many of the commissioners only received notice of the letters the night before they were issued, which has them feeling as though their input had not been considered over what is essentially a complete change in policy.

CFTC chairman nominee Timothy Massad recognized the need for a more streamlined and organized rule making process while being questioned at a confirmation hearing by the Senate.

While former CFTC chairman Gary Gensler spent most of his time putting many of the Dodd-Frank rules into place, it seems Massad’s focus will fall on figuring out how to amend and enforce these rules.

Commissioner Chilton to Leave CFTC Next Week

CFTC Commissioner Bart Chilton has announced that he will be leaving the Commodity Futures Trading Commission by the end of next week.

Chilton, who had said he would be leaving the CFTC in November, has stated that he will step down from the Commission by March 22nd.

Though he announced his departure months ago, Chilton had decided to stay on for a little longer than planned, most likely to serve as an extra hand at the commission, which would have been running with only two of the five commissioners it requires had he left.

However, now that the Senate has met with, and seems likely to accept, the three replacement nominees set to join the CFTC, Chilton may feel as though he can step down without causing any issues.

Along with former chairman Gary Gensler, Chilton was among the most vocal supporter within the CFTC for stricter position limits for traders and other largely contested rules formed from the Dodd-Frank Act.

Chilton plans to finish writing his book, “Theft” which will detail the relationship between Wall Street and Washington, telling Bloomberg in an interview “I have a book to write, and I want to get to it.”

Chilton will be succeeded by Sharon Y. Bowen, pending her likely approval from the Senate.

CFTC Chairman Nominee Timothy Massad Likely to Be Approved by Senate

It looks as though CFTC chairman nominee Timothy Massad will be approved by the Senate, after dispelling any doubt about his commitment and experience at a hearing in Washington yesterday.

The Senate was initially unsure about President Obama’s choice in replacement for Gary Gensler, based on a lack of experience in many of the areas the CFTC regulates. However, after discussing his relevant experience and vowing to uphold a strong enforcement program, it seems the Senate has found no reason to doubt the CFTC chairman nominee.

Massad, having recently lead the unwinding of the Troubled Asset Relief Program (TARP), feels that this, along with his time as a corporate finance attorney, has given him enough experience with regulation and derivatives to be able to handle the responsibilities of the CFTC position.

Massad will be replacing Gary Gensler as the new CFTC chairman. While Gensler spent his time as chairman putting a large portion of the rules instituted by the Dodd-Frank Act into play, it seems Massad’s time will be spent enforcing these rules.

Massad was one of several CFTC nominees to speak on their experience in front of the Senate yesterday, being joined by Sharon Bowen and J. Christopher Giancarlo, who also seem likely to be approved.

Should all three be approved, the CFTC will have a full staff in terms of commissioners once again, as the commission is currently operating with only three of the five it requires.

Senate Questions New CFTC Nominees

The three CFTC nominees waiting for approval to join the Commodity Futures Trading Commission are now facing some questions at a Washington approval hearing from the Senate over how much they will be willing to enforce the rules put in place by the Dodd-Frank Act.

Among the nominees is President Obama’s choice for CFTC chairman, Timothy Massad. Drawing skepticism from the senate, some are worried that Massad doesn’t have much of a record or policy in regards to what the CFTC regulates.

Outside of Massad, CFTC nominees Sharon Y. Bowen and J. Christopher Giancarlo, who are slated to take on roles as commissioners, will also be answering some questions for the Senate.

Among the concerns, it seems those involved in the matter are eager to hear about the CFTC nominees’ views on speculation in commodity markets and the reach of Dodd-Frank rules overseas.

Upon, approval, these CFTC nominees will significantly change the make-up of the Commission’s current leadership. The CFTC is already only operating with three of the five commissioners it’s supposed to, and with commissioner Chilton on his way out, they will actually be making up the majority of the Commission’s leadership.

Senate Planning to Elect Timothy Massad as CFTC Chairman

According to the Wall Street Journal, the Senate seems likely to vote the current nominee for chairman of the Commodity Futures Trading Commission, Timothy Massad, into the position sometime next month.

Former CFTC chairman Gary Gensler stepped down earlier this month; Timothy Massad has been nominated to take over for the current interim Commissioner, Mark Wetjen.

While this clears up a bit of the uncertainty around the CFTC, there are still many concerns regarding the state of the CFTC with Gensler gone.

Gensler had a reputation for being extremely hard on banks in terms of regulation, possibly to a flaw, as his rulemaking became the subject of several lawsuits during his time. While democratic lawmakers are hoping to see Timothy Massad keep a close watch on banks, republican lawmakers are hoping to see a softer side of the CFTC.

Tomothy Massad himself has noted that he will have to be diligent in making sure the CFTC isn’t taken advantage of during this transition period. The Senate will also be voting in two other nominees as commissioners; the CFTC is currently operating with only 3 of the 5 commissioners that are supposed to run it.

Interestingly, with Bart Chilton leaving the CFTC soon, this will mark the first time the CFTC, originally created to monitor commodity trading and hedging within the agricultural industry, will be without a chairman or commissioner with a background in agriculture.

Federal Reserve to Discuss New Physical Commodity Rules

According to Reuters, the Federal Reserve is setting up to take public comments on new physical commodity rules that will limit banks’ ability to trade certain commodities this week.

This marks the Federal Reserve’s first steps in what will most likely be a long road ahead for reforming physical commodity rules. The driving force behind this reform comes from public and political complaints over the risk involved with having banks trade physical commodities like crude oil and aluminum.

During a Senate hearing last July, people involved in the industry spoke out about the banks’ ownership of the storage facilities that are required for physical commodities, and how this allowed them to inflate prices. Hundreds of millions were paid out in fines by big banks for manipulating energy markets in 2013 alone, producing a strong argument for reforming physical commodity rules.

Those taking part in the hearing as witnesses will include Norman Bay of the Federal Energy Regulatory Commission (FERC), market oversight chief Vince McGonagle of the Commodity Futures Trading Commission (CFTC), and Michael Gibson, the Federal Reserve’s director of banking supervision and regulation.

The Federal Reserve has not disclosed how it plans to reform physical commodity rules, but members of the industry will have 60 to 90 days to submit letters to be used in the forming of these new rules after the hearing.

Sharon Y. Bowen to Take Over for Chilton at CFTC

According to Bloomberg, President Obama has selected securities lawyer Sharon Y. Bowen to replace Bart Chilton as CFTC commissioner.

The news comes on the heels of Commissioner Mark P. Wetjen being voted in by fellow commissioners to replace Chairman Gary Gensler until Obama’s nomination for Timmothy Massad is voted on by the Senate.

Chilton announced his departure from the CFTC last month. A colorful character, Chilton was well known for his outspoken nature and his less than conventional speeches. It will be interesting to see how Bowen fills the role.

While initially scheduled to leave at the end of the year, Chilton will most likely stay on longer than expected to help out, as, until Massad and Bowen are voted in, the CFTC would be left with a mere two of the five commissioners it’s supposed to run with.

Bowen got her law degree from the Northwestern University School of Law in Chicago. She currently represents corporations and buyout firms at Latham & Watkins in New York.

It’s unclear as to when the senate will vote on Bowen.

Wetjen to be Temporary CFTC Chairman

As the year comes to an end, so will the term for current Commodity Futures Trading Commission chairman Gary Gensler, according to Bloomberg, commissioner Mark P. Wetjen will be temporarily taking his place.

Though Obama has nominated Timothy Massad to take the position, the Senate is yet to hold a hearing to vote on the matter. In the meantime, the commissioners will vote fellow commissioner Wetjen into the position on an interim basis, as they wait on the Senate.

Wetjen, a democrat, was a former advisor to Senate Majority Leader Hary Reid.

Wetjen may find himself sitting as chairman for a while, as the Senate seems to be dragging their feet a bit when it comes to voting in new members to the CFTC; they have yet to vote on the replacement for Jill E. Sommers, who stepped down from her position back in July.  With Sommmers gone, Gensler leaving, and commissioner Bart Chilton having one foot out the door, the CFTC may find itself being run by merely two of the five commissioners it’s supposed to have.

Chilton, who was a favorite to take over as chairman before announcing his own departure recently, will actually stick around longer than he had previously stated in order to help the Commission as it adjusts to these new changes.

House Passes Bill to Weaken Dodd-Frank Act

According to Bloomberg, an amendment to the Dodd-Frank Act was passed on Wednesday that would limit the extent to which the rule would affect large banks. The bill would essentially remove the “swaps push out” aspect of the rule, which forces banks to move their derivatives activity to affiliates that don’t have access to deposit insurance or discounted borrowing.

The initial purpose of the push out provision was to help guard against some of the riskier trading done by banks and prevent a situation similar to the financial crisis of 2008. However, both banks and regulators like Federal Reserve Chairman Ben S. Bernanke have warned that if the Dodd-Frank Act isn’t amended, swaps trading may begin to shift to less regulated entities.

The amendment would allow what some are calling more basic derivatives trading to occur, while not affecting more complex and riskier trades.

While the bill has passed in the House with bipartisan support, it seems likely to be more of a token gesture, as chances of it passing through the Democrat- majority Senate are very slim. The White House has also expressed contention with the bill, stating that it’s not the time to make amendments, as the focus should be on actually finishing the implementation of the Dodd-Frank Act. For now, banks should continue to make preparations to adjust to the rule as it currently exists.