WASHINGTON -- House Agriculture Committee Chairman Collin Peterson, D-Minn., said June 24 that legislation he is planning to give the Commodity Futures Trading Commission more authority over energy futures and more staff also may affect the CFTC's powers to regulate agricultural and financial futures.
After a hearing, Peterson told reporters his committee would write a bill based on the various bills that have been introduced to address concerns about energy trading. But he added, "These bills affect the whole futures system. I don't know how this works unless it's under the same structure."
At the hearing, Acting CFTC Chairman Walt Lukken veered back and forth between telling the committee that his economists still find no evidence that speculators have affected energy prices and making the point that the CFTC needs more staff to do its job. "Corn markets are a problem as well -- making sure they're functioning," Lukken said. "We need more bodies."
Lukken said the CFTC's current budget is $112 million, that President Bush's fiscal year 2009 budget asked for $130 million for the agency and that the agency thinks it needs $157 million for fiscal year '09 to do a full job. Lukken noted that the fiscal year 2009 House agriculture appropriations bill would provide $135 million for the CFTC.
Pushed back
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The House Agriculture Committee was scheduled June 24 to mark up a bill to give the CFTC more authority to regulate energy futures and more staff, but Peterson postponed further consideration of the CFTC measures until July.
The CFTC is scheduled to complete an investigation into energy trading by Sept. 15, but Peterson warned Lukken that Congress won't wait until after Sept. 15 to write CFTC legislation because Congress plans to adjourn by Sept. 26 and not return for a lame-duck session.
Peterson told reporters that he plans intensive study of the futures issues in the next two weeks and to then hold more hearings before marking up a bill. Peterson said he has been frustrated in trying to find out exactly how much money institutional investors have poured into the market and what role swap dealers have played. "There's no hard data," he said.
Many committee members told Lukken they were under pressure from their constituents to explain the CFTC's position that speculators have no effect on energy prices. Rep. Jim Marshall, D-Ga., said the idea "that money comes into a market and doesn't cause an increase in prices is a little odd." Lukken said it is "intoxicating" to think that increased regulation could cut prices in half, but that the CFTC thinks oil prices are in line with fundamentals. Lukken said he fears that increasing the margin requirements that speculators must pay to insure against defaults would reduce liquidity for institutional investors, causing other problems, or encourage them to take their business to other countries.
Rep. Steve Kagen, D-Wis., said he thinks the CFTC has no more power than a "neighborhood watch" sign that "watches a robbery" at someone's house. After Lukken acknowledged that any fines the CFTC levies to go the Treasury, Kagen said Congress should use some of that money to give the agency more police.
