By Alexandra Alper
WASHINGTON, April 3 (Reuters) – A Democratic senator urged
President Barack Obama not to renominate the top U.S.
commodities regulator unless he quickly implements trading curbs
intended to dampen speculation and reduce fuel costs for
Americans.
Florida Senator Bill Nelson in a letter dated Tuesday sought
swift action by Commodity Futures Trading Commission chief Gary
Gensler to implement limits, already finalized by the commission
but opposed by industry groups, on the number of oil contracts a
single trader can hold.
“Middlemen are bidding up the price of oil and flipping
futures contracts for a quick profit, much like speculators who
bought and resold condominiums during the real estate bubble,”
wrote Nelson, who has long been raising concerns that
speculators are responsible for driving up oil prices.
“Mr. President, if CFTC Chairman Gary Gensler doesn’t act
soon to implement rules that will cut down on speculation in the
oil futures markets, then you should consider not reappointing
him.”
Although Gensler’s term expires this month, the law allows
for the Democrat and former Goldman Sachs executive to
remain on the job through 2013 even if he is not renominated.
The CFTC finalized the new trading curbs in October, but
they have yet to go into effect.
Position limits were part of the 2010 Dodd-Frank law, but
the CFTC’s proposal and its controversy predate the legislation.
Wall Street has decried the position limits, first proposed
following a commodity spike in 2008, as a misguided political
attempt to stem soaring prices.
Two top industry groups have sued to stop the reform, which
would cap the number of contracts speculative traders can hold
in 28 commodities, including oil, coffee and gold.
LOBBYING AT PLAY?
The position-limit rules will be phased in over time, with
the final limits for all contract months set only after the
agency has collected a year’s worth of swaps data.
The CFTC, for its part, says the delay is because other
critical rules that it must first hash out with other
regulators, such as the definition of a swap, have not been
finalized.
Nelson complained on Tuesday that new rules were supposed to
go into effect by January of last year. He said intense pressure
from industry lobbyists was at the heart of the delay.
Nelson’s letter is not the first Democratic bid to upset
Gensler’s chairmanship of the CFTC.
Senate Democrat Maria Cantwell and Independent Bernie
Sanders both objected to Gensler’s nomination in 2009, fearing
he would not be tough enough on swaps regulation.
While Gensler worked as a top official at the U.S. Treasury
during the Clinton administration, he participated in talks over
legislation that deregulated swaps and relaxed barriers between
commercial and investment banks.
The CFTC was not available for comment.
A White House spokesman was also not immediately available
for comment.
