The U.S. Commodity Futures Trading Commission should voluntarily follow President Barack Obama’s effort to streamline regulations as it sets new rules on the $583 trillion swaps market, two top House Republicans said.
Earlier this month, Obama ordered a “government-wide” review of regulations aimed at removing outdated or burdensome rules and limiting costs. The order doesn’t apply to independent agencies, including the CFTC and Securities and Exchange Commission, which are implementing hundreds of pages of regulations under the Dodd-Frank financial overhaul law.
“Adhering to the president’s order would respond to legitimate and growing concerns from businesses across the country about the rulemaking process under way at the CFTC,” U.S. Representatives Frank Lucas, an Oklahoma Republican and chairman of the House Agriculture Committee, and Michael Conaway, a Texas Republican, wrote in a Jan. 26 letter.
The CFTC and SEC are writing new regulations for the swaps market after largely unregulated trades helped fuel the 2008 credit crisis. The law aims to have most swaps guaranteed by clearinghouses and traded on exchanges. The Basel-based Bank for International Settlements estimated in 2010 that the global market for private, or over-the-counter, derivatives was $583 trillion.
The “wide-ranging impact” of Dodd-Frank’s derivatives measures “warrants a commitment to uphold the same standard of review that the president has set for other federal agencies,” Lucas and Conaway wrote to CFTC Chairman Gary Gensler.
The congressmen said the CFTC is “prioritizing speed” and creating an “irrational sequence” of rules as it seeks to comply with Dodd-Frank’s mid-July deadline.
Gensler said at a Jan. 20 commission meeting that the agency is following the “spirit” of Obama’s order.
“We need to go through the entire rulebook given the new law and really see what needs to be revised, changed,” Gensler said.