WASHINGTON (Reuters) - Wall Street’s top U.S. derivatives regulator could soon be left with a leadership vacuum after a key U.S. senator said Tuesday she does not expect her committee to vote on President Barack Obama’s nominees to replace its departing commissioners until the new year.
“We are talking about doing this after the first of the year,” Senate Agriculture Chairman Debbie Stabenow, Michigan Democrat, told reporters in the hallway of a Capitol Hill office building.
The delay in a confirmation vote does not bode well for the five-member Commodity Futures Trading Commission, the regulator that polices the over-the-counter derivatives market as well as exchange-traded futures and options.
The CFTC is already down one commissioner after Republican Jill Sommers departed earlier this year. Chairman Gary Gensler’s term will expire on January 3, when Congress officially ends its current session.
Democrat Bart Chilton, a third commissioner, has signaled he plans to leave the agency soon. Chilton has not given an exact departure date, though at the time of his November 5 announcement during a public meeting to vote on new rules, he said it would be his last.
In August, Obama nominated J. Christopher Giancarlo, a manager at brokerage services company GFI Group, to replace Sommers. And earlier this month, Obama tapped Treasury official Timothy Massad to serve as the new chairman.
Obama has yet to name a replacement for Chilton. Attorney Sharon Bowen, a partner at Latham & Watkins LLP in New York, is being vetted for the position, industry sources have said, but her candidacy has not been confirmed.
Although the CFTC has largely completed writing rules required by the 2010 Dodd-Frank Wall Street reform law, having only two commissioners left on the normally five-member panel could hamper the agency’s ability to implement the reforms or bring enforcement actions against lawbreakers.
If Gensler and Chilton both depart before their replacements are installed, the CFTC would be left for some time with Commissioners Scott O’Malia, a Republican, and Mark Wetjen, a Democrat.
Having two commissioners technically constitutes a quorum, meaning they could still vote on rules or enforcement matters.
Historically, there have been at least two other times where the CFTC has been down to just two commissioners, according to a person with knowledge of CFTC history.
However, in those cases, the two remaining commissioners belonged to the same political party, potentially making it easier to agree and get things done.
Stabenow said she hopes her committee will take up the nominations in the first quarter of 2014.
The delays in part stem from the ongoing work on the Farm Bill and the budget, which are competing for the committee’s attention, she said.
Asked if the committee would wait until Obama nominated Chilton’s replacement before acting, because the three candidates could be considered at a single hearing, Stabenow said it would depend on how quickly the nomination is made.
Reporting by Charles Abbott; Writing by Sarah N. Lynch; Editing by Ros Krasny and Phil Berlowitz