WASHINGTON (Reuters) - A Democratic senator urged President Barack Obama not to renominate the top U.S. commodities regulator unless he quickly implements trading curbs intended to dampen speculation and reduce fuel costs for Americans.
Florida Senator Bill Nelson in a letter dated Tuesday sought swift action by Commodity Futures Trading Commission chief Gary Gensler to implement limits, already finalized by the commission but opposed by industry groups, on the number of oil contracts a single trader can hold.
“Middlemen are bidding up the price of oil and flipping futures contracts for a quick profit, much like speculators who bought and resold condominiums during the real estate bubble,” wrote Nelson, who has long been raising concerns that speculators are responsible for driving up oil prices.
“Mr. President, if CFTC Chairman Gary Gensler doesn’t act soon to implement rules that will cut down on speculation in the oil futures markets, then you should consider not reappointing him.”
Although Gensler’s term expires this month, the law allows for the Democrat and former Goldman Sachs executive to remain on the job through 2013 even if he is not renominated.
The CFTC finalized the new trading curbs in October, but they have yet to go into effect.
Position limits were part of the 2010 Dodd-Frank law, but the CFTC’s proposal and its controversy predate the legislation.
Wall Street has decried the position limits, first proposed following a commodity spike in 2008, as a misguided political attempt to stem soaring prices.
Two top industry groups have sued to stop the reform, which would cap the number of contracts speculative traders can hold in 28 commodities, including oil, coffee and gold.
The position-limit rules will be phased in over time, with the final limits for all contract months set only after the agency has collected a year’s worth of swaps data.
The CFTC, for its part, says the delay is because other critical rules that it must first hash out with other regulators, such as the definition of a swap, have not been finalized.
Nelson complained on Tuesday that new rules were supposed to go into effect by January of last year. He said intense pressure from industry lobbyists was at the heart of the delay.
Nelson’s letter is not the first Democratic bid to upset Gensler’s chairmanship of the CFTC.
Senate Democrat Maria Cantwell and Independent Bernie Sanders both objected to Gensler’s nomination in 2009, fearing he would not be tough enough on swaps regulation.
While Gensler worked as a top official at the U.S. Treasury during the Clinton administration, he participated in talks over legislation that deregulated swaps and relaxed barriers between commercial and investment banks.
The CFTC was not available for comment.
A White House spokesman was also not immediately available for comment.
Reporting By Alexandra Alper; Editing by Steve Orlofsky and Edmund Klamann