Commodity Futures Trading Commission (CFTC) Chair Gary Gensler this week was grilled by the House Agriculture Committee over everything from missing MF Global (MFG) assets to unwritten Dodd-Frank market rules to gas prices, and it was a bipartisan shooting match.
In a committee hearing billed as a “review of the 2012 agenda of the CFTC,” member after member demanded to know the status of the MFG investigation, where nearly $1.6 billion in customer assets are, then zeroing in on how the commission intends to protect the assets of individual investors in the future. Because Gensler recused himself from the MFG issue – he worked with former MFG CEO John Corzine some years ago – he could provide little new information for the committee. Committee members also hammered Gensler on the status of CFTC rulemakings emanating from enactment of the Dodd-Frank Act. Committee Chair Frank Lucas (R, OK) told Gensler he was becoming anxious because while the commission has promulgated 28 new rules, more than 20 have yet to be finalized or published.
Key among these pending rulemakings, he said, are the definitions of a “swap” or “swap dealer” or “major swap participant,” and this lack of clarity, Lucas said, is confusing the marketplace. A number of committee members from both sides of the aisle pressed Gensler on excessive institutional and non-hedger speculation in futures markets, with Rep. Joe Courtney (D, CT) and Rep. Peter Welch (D, VT) citing a Goldman Sachs report about the “speculative premium” built into the price of oil and gas – the equivalent of 26 cents per gallon of gasoline.
Rep. Jeff Fortenberry (R, NE) also zeroed in on excessive speculation, telling the CFTC head that while futures markets are “designed to mitigate risk, we actually have a system creating risk now.” Gensler took the opportunity to put in a plea for greater FY2013 funding, warning that without “adequate funding,” he may be forced to take drastic steps including moving personnel from enforcement to registration.