As part of the Dodd-Frank 2010 financial reform law, the Commodity Futures Trading Commission was directed to implement limits on oil speculation. Many analyses have shown that speculation has been a significant driver of recent spikes in oil prices.
A judge last week blocked the CFTC’s rules from taking effect on schedule, ruling in favor of a consortium of big banks and energy companies. The CFTC is considering appealing the ruling. However, Republicans are seizing on the judge’s ruling to claim that the CFTC’s efforts to limit oil speculation are just wasteful spending. Four House Republicans said in a letter:
Given the court’s finding that the CFTC failed to properly justify the rule, we are concerned that CFTC funds were prioritized to promulgate and defend a rule that was not central to the financial crisis…We are very concerned, in the wake of the financial crisis, that CFTC staff are using limited resources to pursue ideological and political goals rather than using the resources allocated by Congress to carry out the direct requirements of the agency.
These Republicans act as if the Dodd-Frank law did not instruct the CFTC to implement speculation limits, thus making it a “direct requirement” for the agency. But this is just part and parcel of the House Republican effort to scuttle Dodd-Frank by not providing regulators with enough funding to implement the law.
The House Republican budget, for instance, would force the CFTC to lay off 8 percent of its staff, while it already can’t handle its workload. “We’re way underfunded at the CFTC,” said Chairman Gary Gensler. “Imagine if, all of a sudden, there are eight times the number of teams on the [football] field, but only seven refs,” Gensler said. “There would be mayhem on the field. The fans would lose confidence.”
House Financial Services Chairman Spencer Bachus (R-AL) has even admitted that the agency doesn’t have the resources to do its job. But instead of providing those resources, it seems that the House GOP will be claiming that the rules themselves are a waste of money.