CFTC Commissioner Chilton Takes Support for Position Limits to the People

Posted by Josh Garrett on March 15, 2011 at 3:58 pm

During his appearance on The Ed Show, CFTC commissioner Bart Chilton presented this chart, which shows an explosion of oil speculation since 2008, as evidence of the need for speculation limits. (image: msnbc.msn.com)

The Commodity Futures Trading Commission (CFTC) is facing powerful opposition on its path to forming and implementing new limits on oil speculation, but Commissioner Bart Chilton has lately continued to stump for limits.

Chilton’s most recent round of public outreach began in late February when he wrote an opinion piece for McClatchy Newspapers emphasizing the need for new CFTC funding and challenging those who oppose it. He chastised the political opponents of increased CFTC funding, connecting today’s unchecked market to the irresponsible investments that sparked the financial crisis of 2008:

Some people making the “no new funding case” are the very same folks who opposed reforms in the first place. Supposedly, they could still argue for no new regulation, but a thoughtful policy case doesn’t exist. Perhaps they think when the economy collapsed, all was well with regulation and Wall Street.

Chilton also dismissed arguments against new regulations based on the need to cut government spending and lent his support to a proposal by President Obama to levy fees on transactions to pay for stepped-up regulation. He attempted to pre-empt opposition to transaction fees by asserting that the economic stakes could not be higher: “Going back in time to lax regulation, big bank bailouts and an economic meltdown is not an option.”

Last Wednesday, Chilton discussed his position with Ed Schultz, host of MSNBC’s The Ed Show (watch the full clip of the interview below or read a transcript at msnbc.msn.com). In a segment bluntly titled “Wall Street vs. Working Americans,” Chilton laid out his argument in general terms and placed it in the context of the Middle East unrest that has been driving up oil prices. Events in Libya and elsewhere had a hand in recent price increases, he said, but were not the only driving force. Chilton was careful to stop short of indicting speculators as a group, but said their activities are without a doubt “tapping the gas pedal” on the road to higher gasoline and heating oil prices. In the end, his appearance on the show amounted to an exhortation for support of position limits. “We need these position limits in place and we need them soon,” he said.

On Tuesday, Chilton made his case before the Structured Trade and Finance in the Americas conference with a speech in Boca Ratón, Florida. In his remarks, Chilton acknowledged that speculation is an important part of the commodity market, but that some speculators’ massive investments have “the potential of moving markets, of influencing true price discovery.” To support his argument, Chilton referred to a statistic recently released by the CFTC that shows a 64 percent increase in speculative positions in the oil market from June 2008 to January 2011.

Chilton’s public calls for position limits implementation ASAP offer some comfort to those losing hope that effective limits that could curb heating oil and gasoline price volatility will be set any time soon. Assuming Chilton’s position behind closed doors matches the position he stakes out in the media, regulation proponents have a true ally inside the rulemaking body. But a frank assessment of the situation shows that Chilton faces resistance from within the commission, as well as from House Republicans who currently hold the agency’s purse stings. And in that match up, Chilton is the clear underdog.

Visit msnbc.com for breaking news, world news, and news about the economy