Outspoken financial regulator Bart Chilton surprised people when he announced on November 5 he’s leaving the Commodities Futures Trading Commission.
One of three Democratic commissioners on the CFTC, Chilton is leaving after the agency - charged with overseeing the futures market and the $400 trillion derivatives market -- approved speculative position limits. (They passed this rule once before but a judge threw it out.)
The rule is significant, says Chilton, because it curbs the kind of speculation that can drive up commodity prices, impacting the prices average consumers pay for everything from gas to orange juice. He’s been pushing for it since 2008.
This rule, says Chilton, is about preventing speculators from controlling more than 10% of any market, which he considers excessive and allows speculators to push prices around.
Will the rule stick this time, though?
“I think this one will be bullet-proof in court,” Chilton tells us in the accompanying video. “That doesn’t mean the largest speculators on the planet won’t try to litigate against it, but I think it will prevail. That will be good for markets and good for consumers.”
Despite signs of some action at the CFTC, reports have surfaced that the agency is strapped for cash. The CFTC's former enforcement chief, David Meister, told The Wall Street Journal the agency has been forced to delay cases and decided not to filed charges against traders involved in JP Morgan’s (JPM) London Whale trading scandal because the CFTC is cash-starved.
Some have suggested the CFTC is too broke to do anything. Check out the video to see what Chilton thinks about that.
The agency is also in flux when it comes to its composition and leadership. Republican Commissioner Jill Sommers left in July, leaving a vacancy that has not been filled, and Chairman Gary Gensler is leaving when his term ends at year-end. President Obama will nominate Timothy Massad to succeed Gensler. Massad is the Treasury department official responsible for overseeing the unwinding of TARP.
Of this choice, Chilton says, “he’s brought in money from the bailout. People were worried we were going to lose billions of dollars…so that’s a good omen.”
- Bart Chilton