* GOP House Ag leaders ask CFTC inspector general to probe
* Seek review of four rules by April 15
* Ask whether extending Dodd-Frank deadlines would help
* Traders have complained CFTC lowballs costs estimates
WASHINGTON, March 14 (Reuters) - Two key Republican lawmakers said the U.S. futures regulator is taking a "vague and minimalist approach" to analyzing the costs of new rules for swaps traders, and asked its top watchdog to investigate.
The request is the latest in a series of efforts by Republicans to rein in the Commodity Futures Trading Commission as it creates new regulations for over-the-counter derivatives, worth about $600 trillion globally.
Two leaders on the House Agriculture Committee asked the CFTC's Inspector General A. Roy Lavik to review the accuracy of the agency's calculations of costs for four of its proposed rules by April 15, and assess whether the CFTC is living up to its legal obligations to perform due diligence on rules.
"At the very least, Commission staff should undertake a detailed analysis that attempts to quantify the impact using an objective, data-driven approach," said Frank Lucas, chairman of the Agriculture Committee, and Michael Conaway, who heads a subcommittee with oversight of the CFTC, in a letter to Lavik.
The opaque swaps market was blamed for helping accelerate the 2007-2009 financial crisis. To try to prevent future financial contagion from bad derivatives trades, the Dodd-Frank law requires all swaps be reported, and many of the deals to trade in more transparent venues connected to clearinghouses.
The rules target the large banks that dominate the markets, but businesses that use swaps to hedge their risks are worried that they too will face added costs.
The CFTC could face legal challenges if it fails to conduct enough cost-benefit analyses, a Chamber of Commerce official told Reuters recently. [ID:nN07101733]
Senate Republicans last month put the Treasury Department, Federal Reserve and other regulators on notice that they expect rigorous due diligence on Dodd-Frank rules. [ID:nN17172309]
CFTC LOWBALLED COSTS -- TRADE
The CFTC has the biggest role in policing the swaps market, and has scrambled to propose more than 40 new, detailed regulations to put the law into effect.
The Dodd-Frank law gave the CFTC a July 15 deadline to finalize the rules. The agency failed to meet some earlier deadlines, and Chairman Gary Gensler has acknowledged more targets will be missed.
Gensler has said the CFTC will pay close attention to comments from the industry on costs before finalizing rules.
"Asking the public is one of the best ways to actually get a clearer picture on the cost and benefits of proposed rules," Gensler told senators at a hearing earlier this month.
Lawmakers have criticized the pace and order of the rules, complaining an "irrational sequence" has made it hard for affected businesses to follow.
A coalition of energy companies complained a rule proposing duties for swap dealers and major participants would cost more than $400,000 to comply with -- compared with the $20,400 estimated by the CFTC.
Portfolio compression rules would require $5 million to $10 million in technology upgrades for a swap dealer or major swap participant, the International Swaps and Derivatives Association has said, dwarfing the CFTC's estimate of $2,400.
Lucas and Conaway asked the CFTC's inspector general to review the analyses behind those two rules, as well as a rule defining who will be swap dealers and major swap participants, and a new rule on exchanges that trade swaps.
The lawmakers also asked the inspector general to assess whether extending the Dodd-Frank deadline would improve the CFTC's ability to analyze the impact of its rules.
(Editing by Dale Hudson)
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