The Commodity Futures Trading Commission — which oversees the nation’s commodities markets — announced yesterday that it is going to allow for an additional month of comments on the rules governing derivatives that it is implementing under the Dodd-Frank financial reform law. According to Dodd-Frank, the CFTC is supposed to have finished implementing a new regulation regime for derivatives by July, but CFTC Chairman Gary Gensler has already said that the deadline will be missed.
House Republicans been pushing for the CFTC to delay derivatives reform for months, claiming that the rules were being implemented without enough input from businesses and the financial sector. So has this delay assuaged their concern? As the Wall Street Journal noted, it certainly hasn’t:
Republican Rep. Frank Lucas of Oklahoma, chairman of the House Agriculture Committee, which oversees the CFTC, said the agency’s decision to extend the comment period wasn’t enough to address his concerns.
“To expect that market participants can comment on dozens of complex regulations and their cumulative impact on the marketplace meaningfully in 30 days is consistent with the process we’ve seen at the CFTC, a bare minimum and check-the-box approach. We owe more diligence to the economy,” he said in a statement.
Derivatives, remember, were the financial instruments that brought down, among others, the insurance giant AIG (necessitating a government rescue). The Financial Crisis Inquiry Commission reported that derivatives were “at the center of the storm” during the financial crisis.
Despite the role these instruments (and the huge financial firms that used them) played in bringing the economy to the brink, Republicans have been attempting to slow-walk derivatives reform for months, both legislatively and by denying the CFTC funding to implement Dodd-Frank. House Republicans earlier this month introduced a bill to delay derivatives reform for 18 months.
But as CFTC Commissioner Bart Chilton said yesterday, “dangers” still exist in the derivatives market. “There are dangers out there in the OTC world that we need to get a handle on. There are some that want to run out the clock. Many of these people are people who opposed [Dodd-Frank] to begin with want to run out the clock until the next election. Maybe consumers won’t be as hot on reform then,” Chilton said.