Reuters: Regulatory News: US senator urges Obama to replace commodities chief

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US senator urges Obama to replace commodities chief Jun 4th 2012, 19:52 Mon Jun 4, 2012 3:52pm EDT * Senator Sanders slams CFTC's Gensler * Says CFTC should have imposed trading curbs sooner * Gensler's term has expired, can stay through Jan 2013 By Alexandra Alper WASHINGTON, June 4 (Reuters) - A U.S. senator on Monday called on President Barack Obama to replace the chief derivatives regulator with an official who will crack down more quickly on speculation in oil and other commodities markets. In a sharply worded letter, Vermont Independent Bernie Sanders slammed Commodity Futures Trading Commission Chairman Gary Gensler for not swiftly putting in place position limits, which curb the size of positions traders can hold in commodities like gold and oil. The curbs were included in the 2010 Dodd-Frank financial reform law which aimed to rein in the kind of market risk taking that sparked the 2008 financial crisis. "In blatant disregard of the law, Chairman Gensler has allowed oil and gasoline prices to be dictated by Wall Street speculators instead of supply-and-demand fundamentals," Sanders wrote. "As a result, the American people continue to pay much higher prices for gasoline than they should." The CFTC declined to comment. The CFTC's position limits rules, finalized in October, are slated to go into effect later this year. Sanders says they should have been put into place sooner and blames Gensler for the lag. The White House has been mum on its plans for the CFTC chairmanship. Gensler's term expired in April but the law allows him to stay in office until January 2013. Obama has shown a keen interest in cracking down on oil market manipulation as part of his wider push to curb financial market speculation in the wake of the 2008 crisis. In the run up to the November presidential election, he unveiled a plan in April that would boost penalties for firms found guilty of manipulation in the oil futures market and increase funding for the CFTC's surveillance and enforcement staff. The agency has faced a backlash from industry groups eager to overturn the Dodd-Frank position limits rules. The Securities Industry and Financial Markets Association (SIFMA) and the International Swaps and Derivatives Association (ISDA) brought a legal challenge against the rules in December. They argued that they will damage the efficiency of markets and were not explicitly required by Dodd-Frank. Industry groups have also argued there is no concrete evidence to show that speculation in oil markets drives up gas prices. SLAMMED FROM THE LEFT The legal challenge has not stymied criticism among liberal lawmakers, who say the curbs are needed to lower fuel costs for Americans already suffering from a sluggish economy. In March, a group of senate Democrats, including Sanders, wrote Gensler a letter asking him to put the curbs into effect immediately. Later that month, the Vermont lawmaker introduced a bill to force the CFTC to use its emergency powers to impose the curbs swiftly. Reuters has reported that the agency conducted a legal analysis that suggested the agency's emergency authorities would not immediately permit it to impose position limits. GENSLER'S TERM Gensler was sworn in 2009 despite fears among some lawmakers who were skeptical the former Goldman Sachs executive could fairly regulate the same markets he once worked in. Sanders and Senate Democrat Maria Cantwell both objected to Gensler's nomination, fearing he would not be tough enough on swaps regulation. While Gensler worked as a top official at the U.S. Treasury, he participated in talks over legislation that deregulated swaps and relaxed barriers between commercial and investment banks. Link this Share this Digg this Email Reprints

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