WASHINGTON Feb 13 U.S. lawmakers pledge to keep
the Commodity Futures Trading Commission (CFTC) on a tight
leash, as the collapse of two companies that the regulator
oversaw has tainted its ambitious overhaul of Wall Street.
The powers of the CFTC, the nation's top derivatives
watchdog, were vastly expanded in the 2010 Dodd-Frank Act, and
political rhetoric around the regulator is due to heat up as it
relies on Congress to reauthorize its funding.
The CFTC's track record was tarnished by two scandals
involving futures brokers, with the collapse of MF Global
in October 2011, followed rapidly by that of
Peregrine Financial Group, or PGBest.
The funding reauthorization for CFTC would be a natural
trigger for Republicans to debate Dodd-Frank again, though their
hopes of a wholesale repeal of the law were blighted after
President Barack Obama won reelection. Republicans maintain that
the law will be detrimental to jobs growth.
"Another important focus of the Committee will be
reauthorization of the CFTC," said Frank Lucas, the Republican
chairman of the Committee on Agriculture Business of the House
"We must ensure that the Commission is overseeing the
derivatives markets in a responsible manner that provides
stringent oversight and affords strong protections to customers
of those markets," Lucas said.
The Dodd-Frank law aims to avoid a repeat of the financial
crisis by requiring banks to hold far higher safety buffers and
make derivatives trading less opaque by forcing it onto
The House committee, which has a Republican majority,
adopted a plan laying out its agenda for the next two years at a
short meeting chaired by Lucas.
The group oversees the CFTC because of its background as
commodity futures supervisor, but has continued to do so after
the CFTC was mandated to take on the $650-trillion swaps
industry, dominated by investment banks.
The House Committee would address the issue during the 113th
Congress, the group said in its so-called Oversight Plan, and it
also vouched to look at how the CFTC and other regulators dealt
with the Libor rate-rigging scandal.
Republicans have been critical of the Dodd-Frank law because
Obama pushed it through without their support in the wake of the
financial crisis, and because their views are generally more
friendly to those of the financial industry.
But their luck in reforming the law through reauthorization
depends on how they deal with the Senate's Agriculture,
Nutrition and Forestry committee, which is in Democratic hands
and has an equally important say in the matter.