Four high-ranking Republican members of the House Committee on Financial Services accused the Commodity Futures Trading Commission (CFTC) Wednesday of wasting time and money when implementing a law that would have set position limits on derivatives tied to 28 physical commodities.
Representatives Spencer Bachus (R-Ala), Scott Garrett (R-NJ), Jeb Hansarling (R-Tex) and Randy Neugebauer (R-Tex), made the charges in a letter to CFTC Chairman Gary Gensler, arguing that, in pursuing the “Position Limits Law” and other such legislation, the agency is “engaging in projects unrelated to the financial crisis and not required by Congress, which are draining its resources.”
A federal judge vacated the rule on Sept. 28 and remanded it to the CFTC, ruling that the agency had “fundamentally misunderstood and failed to recognize the ambiguities in the statute.” Critics of the proposed rule had argued that, although Dodd-Frank gave the CFTC the discretion to establish position limits to prevent economic burden caused by speculation, it did not require the agency to do so.
At the time of the rule’s passage, several CFTC commissioners also voiced concerns about its implementation, a fact that was noted in the letter. Specifically, the four representatives cited testimony from Commissioner Michael Dunn, who stated at the time:
“Position limits are, in my opinion, a sideshow that has unnecessarily diverted human and fiscal resources away from actions to prevent another financial crisis. To be clear, no one has proven that the looming specter of excessive speculation in the futures market re-regulated even exist, let alone played any role whatsoever in the financial crisis of 2008.”
According to the letter, the CFTC is seeking an almost 50% increase in its budget for next year, in order to better implement its Dodd-Frank mandate. “We are very concerned, in the wake of the financial crisis, that CFTC staff are using limited resources to pursue ideological and political goals rather than using the resources allocated by Congress to carry out the direct requirements of the agency,” the letter went on to state.
In closing, the four representatives asked the CFTC to disclose the cost—both in time and money—that it spent drafting, reviewing and litigating the rule, including expected costs if the agency decides to appeal the ruling. Chairman Gensler and Commissioner Bart Chilton have signaled that they would support a decision to appeal.