The Commodity Futures Trading Commission is deeply involved in a debate over the regulation of speculative trading on energy and other markets. Jeffrey Harris, chief economist for CFTC, who last year claimed he could find no direct link between speculation and high energy prices, is leaving the agency to return to academia, according to a Dow Jones report.
CFTC is about to unveil a major proposal to impose new trading limits on crude oil and other energy futures products, Harris departure timing comes at a critical time. CFTC Chair Gary Gensler has been quoted saying it is the CFTC’s duty to protect the American public from excessive speculation and he is pushing for a consideration of new limits, even though the agency’s economic team never reportedly found evidence of a causal link between excessive speculation and the 2008 price run-up.
There was a concern that Harris’ original conclusion might be politically motivated since CFTC was run by a Republican appointee at the time; however an investigation by the inspector general found no evidence of political meddling. The Dow Jones report notes that Harris has been under considerable pressure as the agency has looked into speculation issues.
Gensler’s move to limit speculation – which is what many surmise will come with the latest proposal – would be a reversal for CFTC. Expect the proposal to come out early in 2010, which is later than the original fall timeframe first announced.