CMC Attends IIF Annual Meeting

Over this past weekend, CMC attended the annual meeting of the Institute of International Finance (IIF) as a special invitee, having contributed to that organization’s position paper on derivatives regulatory policy. The paper, in which CMC’s help has been graciously and formally acknowledged, was on prominent display at the meeting, and many of the over 1,000 attendees took away copies (the IIF ran out of copies despite printing several hundreds). The stimulating panel discussions at the meeting were both wide and deep in their content, covering various aspects of global financial reform, monetary policy and fiscal policy. In addition, the venue also provided an excellent networking opportunity for CMC to liaise with senior international financial services executives and government officials. Being associated with the IIF is a positive for CMC, both because the IIF is expanding its commodity derivatives policy coverage and because it is a well-known institution with a broad reach that is playing an instrumental role in resolving the European debt crises.

Gensler Fights On Two Fronts

While he has probably grown somewhat accustomed to the external attacks from lawmakers, trade groups and business, CFTC Chairman Gary Gensler finds himself also fighting off attacks within the Commission.  The discontent now reaches from CFTC staff to the Commissioners.  Christopher Doering in his Reuters’ article captures the current sentiment.

The discontent in some ways stems from the top. CFTC commissioners have openly disagreed on what the rules should look like, and the best way to put them into effect. Increasingly, some commissioners have spoken out about being left in the dark about what is going on at their own agency.

It now appears to be trickling down to lawyers, economists and others tasked with finishing the rules on which they have been working nonstop for nearly a year, and have at least six more months to go.

Jill Sommers, a Republican CFTC commissioner who has opposed a number of the rules, told Reuters on Friday she was frustrated by a lack of communication to agency commissioners about things going on at the CFTC.  “It’s frustrating that we find things out third hand,” Sommers said. “I understand there are a lot of different things being juggled and we have limited resources at the commission, so I’m sensitive to that, but I would guess there is a better way to keep us all on the same page.”

What many knew was a growing sense of discord culminated in a very public way around the CFTC’s position limit rulemaking.  The draft final rule was leaked and whistleblower complaints were also broadcast.  All of this at a time when the Commission is tasked with finalizing some of its most important rulemakings: position limits, product and entity definitions, capital and margin requirements, etc.  Again, Christopher Doering in his Reuters’ article, outlines the challenges facing Gensler, but also correctly notes that Gensler sought out many of them.

Gensler quickly became a go-to guy for Congress after being sworn in May 2009.  Lawmakers and staffers at the time lauded his ability to explain a complicated subject clearly and simply as they embarked on the Dodd-Frank financial reform legislation in the wake of the 2008 meltdown on Wall Street.

Gensler worked the halls of Congress and was a fixture on financial television as he pushed for a strengthening of the CFTC’s regulatory powers. When the reform bill was before the Senate Agriculture Committee, Gensler had a front-row seat.

The tide has turned, however.

Republicans, who are chafing at new regulations in general, are particularly vocal in their criticisms of the CFTC. Democrats, already concerned the agency is not being tough enough on Wall Street and anxious for action to crack down on speculators they blame for driving up food and fuel prices, are worried the agency may be watering down the rules.

Senior Senate Agriculture Committee Staffer Addresses CMC Members on Policy Call

Gregg Doud, Senior Professional Staff at the Senate Agriculture Committee Republicans, addressed CMC members on our policy call yesterday.  He spoke mainly about financial regulatory reform pertaining to derivatives, but also briefly discussed budgetary matters, the farm bill, congressional politics, and Senate confirmation votes.  Gregg provided a comprehensive briefing on the aforementioned topics, and CMC members had the opportunity to directly ask him several questions.

Costly Regulation Takes Center Stage

The discussion over the appropriate amount of government regulation continues to heat up.  This week, the heads of both parties teed up the debate.  President Obama received a letter from House Speaker John Boehner (R-OH) calling on the President to list the rulemakings that would cost the economy more than $1 billion.  The letter was sent as House Republicans prepare to push for a roll back of many existing regulations this fall.

I am again asking that your Administration provide a list of all pending and planned rulemakings with a projected impact on our economy in excess of $1 billion.  I ask that you provide this information by the time Congress reconvenes, so that the information will be available as the House considers legislation requiring a congressional review and approval of any proposed federal government regulation that will have a significant impact on the economy as we continue our efforts to remove impediments to job creation and economic growth for the American people.

President Obama responded today.  He also used the opportunity to bolster his initiative to reduce the cost of regulatory burdens and further stake out his position:  the cost of regulations in 2009 and 2010 were lower than those implemented under President Bush in 2007 and 2008.  The specific list of seven proposed regulations that could exceed $1 billion are:

A delayed EPA rule restrictions hazardous emissions by coal- and oil-fired electric utility steam generators, at $10 billion.

• New emissions standards for emissions by major industrial and commercial boilers, $3 billion.

• Standards for disposal of coal ash from power plants, $0.6 billion to $1.5 billion.

• New vehicle safety regulations for rear view mirrors, $2 billion.

• Electronic on-board recorders and documents for supporting restrictions on the hours that commercial truck drivers can operate their vehicles, $2 billion.

• New hours of service rules for commercial truck drivers, $1 billion.

CMC Meets with International Institute of Finance

CMC met with senior executives at the International Institute of Finance (IIF), which is based in Washington, DC and is a think-tank, advocacy group and networking forum in the global finance and economics space.  IIF was instrumental in creating the recent bail-out plan for Greece that was accepted by the EU and its member states.  IIF evinced a strong interest in working with CMC on global commodities and financial regulatory issues.  CMC has also been invited to the exclusive IIF annual meeting in September 2011 in Washington, DC.

CMC Meets with IMF Official

CMC met with a senior officer from IMF’s public relations team to discuss issues of global importance in the financial regulatory space. In addition to financial regulation, other topics that were discussed at the meeting included the U.S. debt ceiling and fiscal situation, the Eurozone crisis, commodities prices and the rise of Asian economies.

CMC Invited to Meet with UK Exchequer

CMC was invited to meet with Mark Hoban, Financial Secretary to the UK Treasury and a senior member of the ruling Conservative Party. He opined that all jurisdictions are moving in the same direction when it comes to financial regulation, although he admitted that Europe is far behind the US in implementing reforms. He said that having the Financial Services Authority’s functions subsumed into the Bank of England will make for a more robust and comprehensive regulatory structure in the UK. On the Greece situation, he said that a breakup of the Eurozone would not be in the best interests of Europe. He stood firmly behind the British government’s plan to reduce their fiscal deficit by increasing taxes and decreasing public spending in the ratio of 1:3.