Tarbert makes pledges as Stabenow hints at reauthorization issues
March 13, 2019
Heath Tarbert, President Donald Trump's nominee to chair the Commodity Futures Trading Commission, pledged to keep financial clearinghouse regulation in U.S. agencies, while Senate Agriculture Committee ranking member Debbie Stabenow, D-Mich., said that giving the CFTC more tools to deal with enforcement and cyber security might be part of the CFTC reauthorization expected this year.
Pressed at his confirmation hearing by Senate Agriculture Committee Chairman Pat Roberts, R-Kan., to pledge that he would make sure the CFTC is the sole regulator of U.S. clearinghouses, Tarbert said, "I agree with you. … It is very important that the United States have the jurisdiction and sovereignty to regulate our own markets."
The regulation of clearinghouses, entities that settle obligations between parties in financial transactions, has become an issue because the European Union, through its European Market Infrastructure Regulation (EMIR), has appeared to encroach on U.S. regulation. Vice President of the European Commission Valdis Dombrovskis and Christopher Giancarlo, the current CFTC chair, today issued a statement that they reached agreement on cross-border derivatives regulation.
In both his opening statement and under questioning from Stabenow, Tarbert, who is assistant secretary of the Treasury for international markets, said he would prioritize finalization of the rules under the Dodd-Frank financial services reform bill, particularly position limits.
“There is no sector more important than agriculture,” he said. “Our nation’s farmers and ranchers depend on derivatives markets to hedge their production and delivery costs, and have done so for more than 100 years. These markets ensure America’s food makes it from our farms to our kitchen tables by enabling farmers and ranchers to receive fair value for their hard work while consumers benefit from stable prices. The grain elevators, mills, distributors, manufacturers, and other producers that make America’s agricultural industry the envy of the world also rely upon and benefit from these markets daily. Heath Tarbert
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Stabenow told Tarbert she is concerned about whether the CFTC has the tools to enforce the law and deal with cyber security concerns and suggested Congress might take up those issues in reauthorization. Tarbert said that, if confirmed, he would be happy to give Stabenow his views on both issues. He also said it is up to elected officials to decide whether the CFTC needs user fees to add to its budget.
In his opening statement, Tarbert, who grew up in Baltimore, noted that his father served as comptroller of the Maryland Port Administration, where "he oversaw the yearly flow of hundreds of thousands of metric tons of agricultural commodities through Baltimore, including exports of American soybeans, meat, poultry, animal feed, and bulk grains as well as imports of coffee and cocoa beans that were processed and refined for eventual re-export by U.S. companies."
Tarbert promised to monitor convergence in agricultural markets and trade in ethanol-related Renewable Identification Numbers.
"There is no sector more important than agriculture," he said. "Our nation's farmers and ranchers depend on derivatives markets to hedge their production and delivery costs, and have done so for more than 100 years. These markets ensure America's food makes it from our farms to our kitchen tables by enabling farmers and ranchers to receive fair value for their hard work while consumers benefit from stable prices. The grain elevators, mills, distributors, manufacturers, and other producers that make America's agricultural industry the envy of the world also rely upon and benefit from these markets daily. Equipping our agricultural sector with the tools to hedge risk and receive fair prices was — and always will be — the very cornerstone of the Commodity Exchange Act. Simply put, if the commodity derivatives markets are not working for the benefit of our farmers and ranchers, then they are not working."
Tarbert also noted that his brother, Colin Tarbert, is a "proud Democrat" who served as deputy mayor in Baltimore, and emphasized his own bipartisanship.
"In testifying before Congress last year on the importance of attracting foreign investment while maintaining our national security, I emphasized that these aims are 'the exclusive concern of neither Republicans nor Democrats' and are 'truly American aims that transcend party lines,'" Tarbert said. "The same is true of the CFTC's mission. The uniqueness of the CFTC and the derivatives markets it regulates — along with their impact on the national economy — cannot be over-emphasized. Commodity futures, swaps, and options provide critical risk management and price discovery tools that can promote long-term stability and growth in the real economy. These financial instruments affect the lives of everyday Americans in ways often unseen, moderating the daily prices consumers pay for everything from groceries to gasoline and heating bills to home mortgages."
Roberts said the committee would attempt to vote on the nomination "in the very near future." He noted that 25 agriculture groups have endorsed Tarbert.
–The Hagstrom Report