PurplePoll: Obama leading but independents moving to Romney, and CO, VA, FL, OH Purple Predictors

The April 2012 PurplePoll shows Mitt Romney getting a second look from voters, with President Obama maintaining a small but consistent lead across the Purple electorate.

Partisan Divide Could Halt 2013 Appropriations Process

A bit unexpectedly, fiscal 2013 appropriations bills were moving quickly through committees this week.  Despite lawmakers attempt to ready bills it is unclear whether House and Senate leadership will be able to move them, as there is a significant difference in overall spending levels.  The Senate appropriators are expected to move 12 bills totaling $1.047 trillion later today.  Their counterparts in the House, however, will move a package that is $1.028 trillion.   Bridging this gap is a heavy lift under normal circumstances, but the White House increased pressure yesterday when Jeffrey Zients, acting director of the Office of Management and Budget (OMB) told House Appropriations Chairman Harold Rogers (R-KY) in a letter that “until the House of Representatives indicates that it will abide by last summer’s agreement, the president will not be able to sign any appropriations bills.”  The Senate version is in line with the agreement referenced in Zients letter.

President’s Anti-Speculation Campaign Draws Skepticism

Under pressure to address high gasoline prices in a politically charged election cycle, President Obama outlined an initiative to strengthen oversight of energy markets.  It is important to note that some of the President’s proposals require significant budget increases – including an additional $52 million in CFTC funding.  To garner such increased appropriations as lawmakers ready for the campaign trail with the budget a hot-button issues seems highly unlikely.

The President plan would:

1)      Increase funding to increase the number of surveillance and enforcement staff charged with oversight of the oil futures market;

2)      Allow the Commodity Futures Trading Commission (CFTC) to upgrade the technology used to monitor the energy markets;

3)      Increase the civil and criminal penalties for those convicted of manipulating the oil futures market;

4)      Provide the CFTC with additional the authority to limit disruptions in the oil market, including allowing the CFTC to direct exchanges to raise margin requirements; and

5)      Expand access to CFTC data so that analysts can better understand trading trends in the oil markets.

CME Group quickly issued a response warning the Administration against “mistakenly categorizing speculation as a form of manipulation.”  Moreover, CME Group defended the exchange’s right to set margins.  “The Administration must recognize that exchanges, as operators of regulated energy markets, are in the best position to monitor volatility and manage margin requirements,” CME Group said.

Potentially noteworthy: In his Rose Garden speech unveiling the initiative President Obama invoked Enron as a cautionary tale.  A day later, CFTC Chairman Gensler also invoked Enron as justification for the swap dealer rule.  Ten years later, Enron continue to have political traction.

CFTC Wins In President’s Budget Proposal

All the tea leaves indicate the President’s budget proposal is DOA, but don’t throw it in the trash just yet . . . Embedded in the lengthy proposal is a significant increase for the Commodity Futures Trading Commission.  The President supports raising the budget from $205 million in 2012 to $308 million in 2013.  In a budget full of cuts, this is an almost 52% increase largely justified by Dodd-Frank requirements.  Also important is the absence of a user fee from the Administration’s request.  Instead of including it in the budget, the President said he “strongly supports” legislative efforts to fund the Commission with user fees.  CMC, however, is doubtful that this Congress would approve such a proposal.

It is also doubtful the Commission receives a $308 million budget in 2013 as Congressional appropriators significantly undercut the President Obama’s requests.  Regardless, you can be sure Chairman Gensler will make every opportunity he can to push for the dollars to hire more staff and expand investment in technology.  In a document prepared for the Appropriations Committee, Gensler already said the budget request “strikes a balance between important investments in technology and human capital” and said the additional resources are necessary due to the agency’s expanded mission and scope.

Also of note is the Administration’s proposal to partially repeal the 60/40 tax treatment for futures and options trading.  Treasury estimates its repeal could raise $1.2 billion in revenue over five years.  CMC has successfully fought off past attempts to repeal this provision in the past and we will continue to advocate for its retention.

CMC’s Top Five Articles to Read This Week

Here are 5 articles I don’t think you can miss this week:

Dodd-Frank

MF Global

In Politics

  • Charlie Cook starts to concur with Chuck Gabriel’s presentation at CMC’s SOTI 2012 event.
  • Up In The Air

In Agriculture

In Case You Missed It…5 Articles To Read

  1. CFTC:  Gensler pushing ahead with position limits vote on Tuesday, October 18
  2. Agriculture:  Senate Ag Committee close to a deal which will cut farm subsidies
  3. Treasury:  Prudential regulators issued the Volcker Rule this week for public comment.  The comment period closes January 13, 2012.  The CFTC proposal will be forthcoming.
  4. Politics:  Charlie Cook takes a look at why the GOP is reluctant to get behind Romney 
  5. Finance:  The Bank for International Settlements found that a 1% increase in the amount of loss-absorbing equity big banks are required to hold won’t slow macroeconomic growth according to WSJ article.  Here are the article and report.

 

In Case You Missed It…Articles To Read

Did the Speech Matter?

  • Charlie Cook asks whether voters have stopped paying attention to speeches about job creation and what that means for the President and Republicans.

“We are entering a new phase of the American political dialogue that has been irrevocably shifted in a way that will prove difficult to predict. Historically, though, this type of deep voter anger, unease, and economic pessimism leads to unstable and unpredictable political outcomes.”

Gensler Pushes Capital & Margin Rules to 2012

“Mr. Gensler said the commission won’t take up rules related to margin and capital until next year. Rules for trading platforms being created for this newly regulated market aren’t likely to come up until 2012, either, Mr. Gensler said. The commission also isn’t likely to determine which types of derivatives will be required to be cleared until the end of the first quarter or the beginning of the second quarter of next year.”

Newsome Calls For Investigation Into Sanders’ Leak

“At a time when trust in government is at an all-time low, it is unconscionable that information members of the public supply to the government with the understanding that it will be held confidentially is released to the press for political purposes. Would it be okay for a federal official to leak information about an individual’s payments to the Internal Revenue Service because a government employee believes it bolsters a policy position he or she is promoting? Of course not. This reckless, unprecedented action deserves a full examination by the CFTC and congressional oversight committees.”

CFTC Counsel Tapped For Treasury Post

  • President Barack Obama on Wednesday nominated a former adviser to the Commodity Futures Trading Commission, Cyrus Amir-Mokri, to become an assistant secretary for financial institutions at the Treasury Department.

Is the Banking System Any Safer Three Years Later?  

  • FT takes an in-depth look.  In the most comprehensive review CMC has seen, some of the key questions covered include:
  •      How do regulatory regimes compare worldwide?
  •      Is investment banking still a viable business model?
  •      How will ringfencing work?
  •      With the probable end of “free” banking, how will consumers interact with their banks?
  •      And what’s it like to be an investment banker now?

New York City: 9/11, Then and Now