Agricultural News
Conaway Speaks About Future of CFTC
Tue, 23 Jul 2013 10:36:48 CDT
Subcommittee on General Farm Commodities and Risk Management Chairman K. Michael Conaway delivered the following opening remarks in Washington, D.C.:
Good morning. I'd like to welcome you all to the second in a series of Ag Committee hearings on the future of the CFTC. Today's hearing builds on the perspectives shared at the full committee hearing in May.
I am pleased to welcome Commissioners Scott O'Malia and Mark Wetjen to share their perspectives on what works at the CFTC and what doesn't. Thank you both for being with us this morning.
Almost five years ago, Americans watched with horror as the financial services industry imploded, draining trillions of dollars from their investment portfolios and retirement plans. In response, Congress passed the Dodd-Frank Act, requiring financial regulators to look deeper into the markets they oversee.
In many ways, Dodd-Frank fundamentally changed the regulators as much as it sought to remake the financial markets. Congress mandated a staggering amount of work for the CFTC and it has transformed the commission, conferring vast new registration, reporting, and oversight powers to it.
The commission has spent the past three years on this herculean task, but today, it is frustratingly behind schedule. Rulemakings that were supposed to be completed in a year have slipped into their third year. But, perhaps more concerning has been the pattern of eleventh hour delays of unworkable rules or guidance.
The confusion and delay stemming from the commission's actions are adding up to real costs for market participants. Many companies are in limbo, unsure of how to plan for the impact of rules that might still change. Every hearing, I remark that getting Dodd-Frank done right is more important than getting it done quickly, but the commission seems to be failing at both, unable to complete its work correctly or expeditiously.
A good example of a rule that I am concerned about, and one that we will get into further in the weeks to come, is the customer protection rule the commission has proposed. The proposed rule would require futures commission merchants to hold additional margin and capital to cover all potential shortfalls by customers. This proposal would be expensive to implement and could harm the very customers it seeks to help by raising costs and reducing market competition. Proposed last November, this rule is not ready and has caused needless concern among smaller market participants who would bear the greatest burdens in complying.
The commission must do a better job seeking and considering objective data at the front end of rulemakings, which is why Ranking Member Scott and I have introduced legislation to require the CFTC to conduct an actual analysis of costs and benefits when it proposes its rules.
I hope that Commissioner O'Malia and Commissioner Wetjen can testify about additional ways they believe the internal processes and culture at the commission can be improved. I look forward to a fruitful discussion on how to make sure the rulemaking process at the CFTC is coherent and transparent and how to ensure the commission's future actions are timelier and better prepared.
Finally, as we look at options for how to improve the CFTC, we cannot forget to look closely at congressional mandates for reports, actions, offices, or other requirements on the commission that may be outdated or redundant because of newer requirements. I firmly believe that repealing outdated sections of law is just as important as implementing new ones.
With that, I'd like to again thank both Commissioner O'Malia and Commissioner Wetjen. It is critical that the committee have your perspectives on what is working at the commission - and what is not. Your time appearing today and the time you've spent preparing over the past several weeks is appreciated by us all.
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