WASHINGTON, March 6, 2014 – While the three nominees for the Commodity Futures Trading Commission (CFTC), including for the chairmanship, received a warm bipartisan welcome from the Senate Agriculture Committee today, two senators raised concerns that none of the nominees have experience in the agriculture sector.
The committee met to consider the nominations of Timothy Massad to serve as CFTC chairman, and J. Christopher Giancarlo and Sharon Y. Bowen to serve as commissioners.
Sen. Saxby Chambliss, R-Ga., said the CFTC’s Agricultural Advisory Committee has met just once since 2011. The committee was created in 1985 to advise the CFTC on issues involving the trading of agricultural commodity futures and options and facilitate communications between the CFTC, the agricultural community, and agriculture-related organizations.
“Does anyone want to serve as chair on the Agricultural Advisory Committee?” Chambliss asked.
Massad said he would make sure the committee is chaired and that it will meet more regularly. Giancarlo said that he “would be honored to serve as chair.”
Sen. John Hoeven, R-N.D., was a bit more direct with his concern. “You don’t have any agriculture background, but I understand you plan to talk to farmers…about futures,” Hoeven said. “You need to get out in the field.”
Giancarlo said he was very conscious of the CFTC’s broad mission and that the U.S. futures markets were initially created to hedge price exposure in agricultural markets. “Those markets remain as integral as ever to the business of agriculture,” Giancarlo said. “It is essential that U.S. futures and swaps markets continue to serve the needs of farmers, ranchers, feed yards, grain elevator operators, renewable fuel facilities, energy producers, refiners and wholesalers involved in the production, processing, transportation, and utilization of the commodities that are the backbone of our economy.”
Last year, nineteen agricultural organizations asked President Obama to make sure at least one of his nominees has a background in agricultural commodity futures markets. “While futures have grown beyond agricultural commodities and the CFTC’s regulatory footprint has been recently expanded into swaps, the agricultural futures markets remain as integral to our businesses as they were before the financial innovation that led us to today’s derivatives markets,” the groups wrote. “Throughout the agency’s existence there have always been commissioners that intricately understood agricultural futures markets, as well as the underlying physical markets themselves.”
Chairwoman Debbie Stabenow, D-Mich., opened the hearing by reminding nominees that they will have the responsibility of making sure the futures, swaps, and options markets are safe for trading and free of fraud and manipulation.
“You will need to make sure these companies, like commercial end users, energy firms, and agricultural producers, are able to use these markets to manage their risks and to find fair prices for a wide range of products, from corn to natural gas to aluminum,” Stabenow said. “You will have an obligation to make sure that we never see another MF Global or Peregrine Financial shatter faith in either the markets or the ability of regulators to oversee those markets.”
Each of the nominees vowed to protect the integrity of financial markets, which Massad said are important to businesses of all types – including farmers and ranchers. Each nominee said they would work to combat excessive speculation.
“We must aggressively pursue wrongdoers-whatever their position or size-and we must deter and prevent unlawful practices,” Massad said. “Strong enforcement is vital to maintaining the public’s confidence in our markets.”
Massad currently serves as the Treasury Department’s assistant secretary for financial stability. If confirmed by the Senate, Massad would fill the post vacated by Gary Gensler. Massad joined the Treasury Department in 2009 as chief counsel for the Office of Financial Stability and later became the Chief Reporting Officer for the OFS. In 2011, he was confirmed as an assistant Treasury secretary, where he has overseen the Troubled Asset Relief Program (TARP). Giancarlo currently is executive vice president at interdealer broker GFI Group Inc. and would take the seat vacated by Jill E. Sommers. Bowen currently is a securities lawyer at Latham & Watkins LLP and would assume the seat being vacated by Bart Chilton.
Separately, CFTC today announced that agency staff will hold a public roundtable on April 3 to discuss issues concerning end-users and the Dodd-Frank Wall Street Reform and Consumer Protection Act. The CFTC has received a number of comments and requests for clarification from commercial end-users that have been impacted by Dodd-Frank.
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