CFTC Commissioner: Wall Street is Duplicitous Regarding Dodd-Frank

Econintersect:   CFTC (Commodity Futures Trading Commission) commissioner Bart Chilton (pictured) has leveled some serious charges against capital market firms and trading industry organizations.  Chilton says these Wall Street interest groups are ‘’bastardizing’’ the ‘’regulatory rule-making process’’ spawned by the Dodd-Frank Wall Street Reform Act.  He criticizes them for being uncooperative in providing information for regulatory agencies trying to implement provisions of the Dodd-Frank Act, the 2010 law aimed at reforming the riskiest aspects of the financial sector.  Childress says that the industry groups fail to provide information and then file suit opposing regulation because it does not contain sufficient information.  The response from industry groups is that the process prevented commenters from meaningful participation.

A law suit was filed 02 December 2011 by ISDA (International Swaps and Derivatives Association) and SIFMA (Securities Industry and Financial Markets Association) challenging the proposed CTFC ruling on position limits for certain commodities.   The complaint alleges that the need for limits is not established and cost-benefit analysis has not been done.  (See GEI News.)

Chilton says that cost-benefit analysis is an important process, but it has become a tool for delay and diversion.  He says that industry groups are simply not cooperating in the fact finding process, information that is provided is “crap” and then suits are filed on the basis that the regulators have not used good information.

From Bloomberg:

Chilton, a supporter of the speculation limits, said banks and others should be required to provide cost analyses to rebut regulators’ conclusions.

“We put out a proposal, ask for comments and ask what the costs might be,” Chilton said. “Then we either aren’t provided with costs of the regulation, or what we get from the commenters isn’t very helpful.”

As reported in GEI News, Republicans claim that the regulatory effort is harmful to the economy and have attempted to cut funding for the CFTC.  The Dodd-Frank Act was passed along mostly party lines with Republican opposition.

Editor’s note: The word “duplicitous used in the headline was not one used by Chilton.  It was chosen by the editor as an appropriate summary of the position Cilton has taken, better than the “bastardizing.”

John Lounsbury

Sources:

• CFTC’s Chilton:  Wall Street ‘Bastardizing’ Dodd-Frank Rule-Making (Tom Steinert-Threlkeld, Securities Technology Monitor, 08 March 2012)

• U.S. Regulators ‘Paralyzed’ by Cost-Benefit Suits, Chilton Says (Silla Brush, Bloomberg, 08 March 2012)

• ISDA and SIFMA File Lawsuits Challenging Commodity Futures Trading Commission Rule on Position Limits (Press Release, SIFMA, 02 December 2011)

• Efforts to Emasculate the CTFC Continue (GEI News, 05 December 2012)