House panel quickly approves CFTC tweaks

The House Agriculture Committee easily advanced legislation Tuesday that would reauthorize the Commodity Futures Trading Commission while tweaking its mandate.

The bill would give the CFTC Congress’s blessing to continue operating for another five years, after its authorization expired on Sept. 30. The measure also would tweak the financial regulator’s operations, as the watchdog takes on significantly expanded responsibilities under the Dodd-Frank financial reform law.

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The legislation moved quickly through the panel, as it was just introduced roughly 24 hours before the committee approved it. The full House could consider the legislation in May.

The bill had been backed by the top Republican and Democrat on the panel, and the pair hailed the legislation as a bipartisan achievement that has been hard to come by in this Congress.

“The Agriculture Committee  is demonstrating that it is possible to put partisan rhetoric aside in favor of bipartisan legislation,” said Rep. Collin Peterson (D-Minn.), the ranking Democrat. “We’re the only committee that seems able to do that.”

Peterson, a moderate Democrat who said he is “not a big fan of regulations,” said the House bill strikes the right balance between giving the CFTC the tools it needs to police commodities markets while ensuring businesses are not buried in rules.

Chairman Frank Lucas (R-Okla.) touted the legislation as the product of years of work by the panel. He said the bill addresses some concerns that have emerged about the CFTC in recent years, driven by the high-profile collapses of financial firms MF Global and Peregrine Financial.

The sudden failures of those firms put some customer funds and risk, and the House bill is aimed at putting in place stronger protections. The bill would require customer funds to be electronically confirmed, and subject firms to greater reporting requirements when moving large amounts of customer money around.

The bill would also require the CFTC to conduct cost-benefit analysis of any new regulations. In addition, so-called “end users” of derivatives — commercial entities that rely on derivatives to hedge risk, as opposed to financial players trading derivatives in search of profits — would receive relief from some Dodd-Frank provisions aimed at cracking down on risk in the derivatives marketplace.

Senate Agriculture Chairwoman Debbie Stabenow (D-Mich.) hopes to make her own mark on the CFTC later this year, as she told reporters that she wants to put together her own reauthorization legislation.