WASHINGTON Feb 13 (Reuters) - U.S. lawmakers pledge to keep the Commodity Futures Trading Commission (CFTC) on a tight leash, as the collapse of two companies that the regulator oversaw has tainted its ambitious overhaul of Wall Street.
The powers of the CFTC, the nation's top derivatives watchdog, were vastly expanded in the 2010 Dodd-Frank Act, and political rhetoric around the regulator is due to heat up as it relies on Congress to reauthorize its funding.
The CFTC's track record was tarnished by two scandals involving futures brokers, with the collapse of MF Global in October 2011, followed rapidly by that of Peregrine Financial Group, or PGBest.
The funding reauthorization for CFTC would be a natural trigger for Republicans to debate Dodd-Frank again, though their hopes of a wholesale repeal of the law were blighted after President Barack Obama won reelection. Republicans maintain that the law will be detrimental to jobs growth.
"Another important focus of the Committee will be reauthorization of the CFTC," said Frank Lucas, the Republican chairman of the Committee on Agriculture Business of the House of Representatives.
"We must ensure that the Commission is overseeing the derivatives markets in a responsible manner that provides stringent oversight and affords strong protections to customers of those markets," Lucas said.
The Dodd-Frank law aims to avoid a repeat of the financial crisis by requiring banks to hold far higher safety buffers and make derivatives trading less opaque by forcing it onto exchange-like platforms.
The House committee, which has a Republican majority, adopted a plan laying out its agenda for the next two years at a short meeting chaired by Lucas.
The group oversees the CFTC because of its background as commodity futures supervisor, but has continued to do so after the CFTC was mandated to take on the $650-trillion swaps industry, dominated by investment banks.
The House Committee would address the issue during the 113th Congress, the group said in its so-called Oversight Plan, and it also vouched to look at how the CFTC and other regulators dealt with the Libor rate-rigging scandal.
Republicans have been critical of the Dodd-Frank law because Obama pushed it through without their support in the wake of the financial crisis, and because their views are generally more friendly to those of the financial industry.
But their luck in reforming the law through reauthorization depends on how they deal with the Senate's Agriculture, Nutrition and Forestry committee, which is in Democratic hands and has an equally important say in the matter.