SEC, commodities chiefs won't rule out merger

The heads of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) on Tuesday refused to rule out a merger as the Obama administration works to draw up sweeping changes to the nation’s financial laws.

In testimony before a Senate Appropriations subcommittee, the two agency heads either gave lukewarm support for the possibility or refused to oppose it. SEC chairwoman Mary Schapiro said there was “a logic and efficiency” to a merger.

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Government regulators have discussed a merger between the two agencies, industry sources say, although it is unclear whether the Obama administration will support such a plan when it outlines broad financial regulatory changes by mid-June. The industry expects the administration to release a “white paper” as early as next week.

A merger would prompt a legislative and lobbying turf battle between traditional agriculture and financial interests. It would also face the long-running jurisdictional dispute between two sets of House and Senate committees: the agriculture committees oversee CFTC, while the banking committees oversee SEC.

Neither Schapiro nor CFTC head Gary Gensler fully endorsed a merger, however.

In response to a question from Sen. Jon Tester (D-Mont.) about potential challenges if there were a merger, Gensler responded quickly: “You said if.”

Gensler said he was against a “merger for merger’s sake” and that lawmakers would need to protect his agencies traditional mandate to oversee traditional commodity interests associated with agriculture and ranching.

Gensler refused to entirely rule out a merger if the Obama administration pursued such a policy. Asked whether he would support it, Gensler said he would weigh in at a later date.

"As chair of an independent regulatory agency, my responsibility, I think, to the American public would be to tell you what I believed at that time," he said.

“My personal view is that there is a logic and an efficiency that can be achieved through the merger of the two agencies,” Schapiro said. “But short of that, I also think that the two agencies can do a better job of working together to ensure the protection of investors.”

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