Senate Agriculture Committee chairman Pat Roberts said his bill to reauthorize the Commodities Futures Trading Commission, scheduled for a vote in committee on Thursday, would remove unnecessary federal regulation of so-called end users, such as utilities, airlines and food processors, while improving safeguards against misuse of customer funds.
“My priority as chairman of this committee are the folks in rural America,” Roberts said in releasing text of the bill. Nonetheless, the senior Democrat on the committee, Debbie Stabenow, said the bill is unlikely to pass the Senate, partly because it “misses the mark when it comes to making the necessary investments at the CFTC.” The White House threatened a veto last summer of the House version of the bill, HR 2289, because it “offers no solution to address the persistent inadequacy of the agency’s funding.”
The White House has pressed for significantly higher funding for CFTC and its sister agency, the SEC, on grounds they have larger duties in the wake of the 2008 financial crisis. The 2010 Dodd-Frank bill brought the $400 trillion U.S. swaps market under federal oversight. The administration says CFTC should be allowed to levy fees on the large financial companies, which would help cover the cost of regulating the futures and swaps markets.
In a statement, Roberts said his bill “provides real reforms for end users who were never intended to be regulated as if they caused the 2008 financial crisis,” a frequent complaint from the futures industry and companies that rely on swaps and futures to assure a supply of raw materials and to lock in prices. The industry was rocked by the collapse of two large trading houses, MF Global and Peregrine Financial, and revelations that customer funds were misused.
While Roberts said he offered progressive legislation, Stabenow objected to “tinkering with active rule-making decisions at the commission. If we are serious about offering end-user relief, then one part of that goal should be empowering the experts at the commission to put in place the right rules for end users and the market as a whole.”
A congressional source told Reuters that the Roberts draft remained open to negotiation and could be revised before the committee met to discuss and vote on it. The bill would require the CFTC to act on the application by the London Metal Exchange to register as a foreign board of trade. It does not include a proposal in the House-passed CFTC bill that could require a cost-benefit analysis of proposed regulations. The White House veto threat said the House bill would create procedural delays in CFTC action and undercut the agency’s work “to address end-user concerns.”