A commission without commissioners

David Gura Nov 6, 2013
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A commission without commissioners

David Gura Nov 6, 2013
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The Commodity Futures Trading Commission is one of a cornucopia of financial regulatory agencies in Washington. It’s responsible for the safe and orderly operation of the market in derivatives — bets, essentially, on what will happen in everything from interest rates to pork belly prices.

The CFTC isn’t exactly a huge government operation, but it’s responsible for an enormous market on the order of trillions of dollars, and its leadership ranks are about to shrink.

At a CFTC meeting yesterday, Commissioner Bart Chilton, a regulator with a penchant for peppering speeches and statements with all kinds of allusions, made an announcement.

“Some of you may recall the old Etta James song, ‘At Last,’” he said. “Today, at last, I am pleased to say I will be saying, ‘Vaya con Dios, my comrades.'”

The Commission is already down one member, and its chairman’s term is up at the end of the year. 

Those challenges come on top of a drastically changed job for the regulator, says Jeffrey Manns, a law professor at George Washington University.

“One could say that the CFTC went from being a minnow into being a whale, in terms of regulation in the wake of the Dodd-Frank Act,” he says.

Michael Barr helped write that law; now, he teaches at the University of Michigan. Barr says the CFTC’s new role is key. Derivatives used to be unregulated, and he says that led to the financial crisis — and the need for the CFTC to step in. “It’s a huge undertaking,” he said. “It’s absolutely core to reform. And it’s a fundamental shift, a transformation from the past.”

And one that, according to Frank Edwards, a professor at Columbia Business School, is being done on a small budget. I asked him if the CFTC is equipped to handle its new role.

“No,” he said, after a long pause. “Not really.”

The administration has asked congress to give regulators more money; so far, that hasn’t happened. Now, it will have to do something that may be even harder: get lawmakers to approve three nominees to fill three CFTC vacancies.

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