WASHINGTON, D.C. — Today, U.S. Sen. Sherrod Brown (D-OH) released the following statement after the Senate Agriculture Committee voted to approve the nominations of Timothy G. Massad, Sharon Y. Bowen, and J. Christopher Giancarlo to the Commodity Futures Trading Commission. Throughout the confirmation process, Brown has pressed the nominees on the importance of the CFTC taking additional steps to regulate financial holding companies’ (FHCs) ownership of physical commodities – like aluminum or oil. Brown serves on the Senate Committees on Banking and Agriculture.

“Throughout the confirmation process I have urged the nominees to help steer the CFTC in a direction that protects consumers, end-users, and taxpayers from unfair and risky activities by Wall Street megabanks,” Brown said. “If confirmed, I expect that these nominees will continue the agency’s work implementing policies that bring more transparency and financial soundness to the derivative markets. Adding stability back to the market strengthens domestic manufacturing and helps protect consumers and taxpayers.”

In May 2013, Brown joined six of his colleagues in a letter urging the Commodities Futures Trading Commission (CFTC) to strengthen derivatives rules in regulating the international derivatives market. The senators called on the CFTC to hold U.S.-based financial firms and their foreign subsidiaries to the same accountability standards by utilizing U.S. reporting and regulatory requirements. Currently, overseas offices of U.S.-based financial institutions are not subject to the same reporting requirements and regulations as their parent institutions based in the U.S. The Wall Street Reform law requires the CFTC to draft rules on regulating derivatives trades and multinational transactions, known as “cross-border swaps.”

Brown first shined a light on the physical commodities operations at bank holding companies (BHCs) in July 2013 and has held two hearings examining the impact of commodity ownership on financial markets. In January, Brown chaired a hearing of the Senate Banking Committee entitled “Regulating Financial Holding Companies and Physical Commodities” that examined the practices of federal regulators—like those at the CFTC—overseeing FHC’s ownership of physical commodities as well as those agencies role in regulating nonfinancial activities by BHCs. In October 2013, Brown and U.S. Sen. Elizabeth Warren (D-MA) sent a letter to the London Metals Exchange regarding its proposed changes to rules governing industrial metals trading.

Brown’s Statement for the Record for today’s confirmation can be found below:

Statement for the Record

Senator Sherrod Brown

Senate Committee on Agriculture, Nutrition, and Forestry

April 8, 2014

 

Thank you, Madam Chair.

Under the leadership of Chairman Gary Gensler, and with the help of Commissioner Bart Chilton, the Commodity Futures Trading Commission (CFTC) has grown from a little-known government agency to a central force in the oversight of a $700-trillion global financial marketplace. Since 2010, the CFTC has made impressive progress, completing all but a handful of their rules required under the Dodd-Frank Wall Street Reform and Consumer Protection Act. 

The Dodd-Frank Act vests the CFTC and other regulators with a great deal of responsibility to implement the will of Congress. As a result, they also have significant discretion – perhaps too much – to alter, delay, and water down those reforms. I am concerned that, in the wrong hands, we could regress in a number of ways – through loose rules on banks’ overseas trades or inaction on commodities trading.

I would like to say that I am confident that the CFTC’s progress will continue under the leadership of these nominees, but I cannot. There is still a great deal that I do not know about the nominees and their views on a variety of important issues. Despite my questions and uncertainty, I am voting to advance these nominations. 

This process will not end today. It is the role of the Congress, the Senate, and the Committee on Agriculture, Nutrition, and Forestry to hold the CFTC accountable. Time will tell if we are confirming another Gary Gensler or a Bart Chilton. In the meantime, we must watch their actions to ensure that they are providing open, transparent, and stable financial markets for end users, consumers, and taxpayers. 

Thank you, Madam Chair.

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