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Special Report: Senate Ag Committee holds hearing for CFTC chairman nominee

Special Report: Senate Ag Committee holds hearing for CFTC chairman nominee

13 March 2019 8:30pm EDT

On March 13, 2019, Heath P. Tarbert, nominee to serve as chairman and a commissioner of the Commodity Futures Trading Commission (CFTC), testified before the Senate Agriculture Committee.

This hearing is a key step in the Senate confirmation process and provided members of the Committee an opportunity to question Tarbert about their priorities. It also provided the nominee an opportunity to discuss his priorities, if confirmed.

Although the Committee has not scheduled a vote on the nomination at this time, current CFTC Chairman Chris Giancarlo stated in his remarks at the FIA Boca Conference that he anticipates Tarbert being confirmed and arriving at the CFTC this summer.

Tarbert is currently the assistant secretary for international affairs at the Treasury Department. In that role, he represents the U.S. on the Financial Stability Board and serves as the co-chair of the U.S.-EU Financial Regulatory Forum and the U.S.-U.K. Financial Regulatory Working Group. Prior to his role at the Treasury Department, Tarbert was most recently a partner at the international law firm of Allen & Overy, where he was a leader in its global financial regulatory practice. He previously served in all three branches of the U.S. government, including as special counsel to the Senate Banking Committee, as associate counsel to President George W. Bush, and as a law clerk to Chief Judge Douglas Ginsburg of the U.S. Court of Appeals for the D.C. Circuit and later to Justice Clarence Thomas of the U.S. Supreme Court.

Opening Statements

Committee Chairman Sen. Roberts (R-KS) complimented Tarbert for his public service and noted that his current role at the Treasury Department makes him uniquely qualified to lead the CFTC as uncertainty exists throughout Europe on how regulators will treat U.S. interests and other market participants operating across that continent. Additionally, Roberts highlighted his interests in high-profile issues such as Brexit and issues important to agricultural end users, such as position limits.

Committee Ranking Member Sen. Stabenow (D-MI) complimented Tarbert on his expertise in financial markets and his first-hand experience in the development of the Dodd-Frank Act. Stabenow expressed an interest in learning more about how Tarbert would continue his work at the CFTC to implement Dodd-Frank, finalizing incomplete rules including position limits and establishing minimum capital requirements for swap dealers.

Heath Tarbert highlighted the experience he gained from working in all three branches of the federal government, including developing a deep background in the financial services field and the federal agencies and international bodies that regulate it. Tarbert stressed the importance of working collaboratively across federal agencies, political party lines, and national boundaries.

When discussing the opportunity to lead the CFTC, Tarbert commented that the chairmanship has “special obligations and responsibilities,” chief of which is “ensuring that our derivatives markets are open, transparent, competitive, and financially sound, while at the same time free from fraud and manipulation.”

Tarbert also highlighted the importance of the farmers and ranchers who depend on derivatives markets to hedge their production and delivery costs as well as the everyday Americans who experience the benefits of these products “in ways often unseen, moderating the daily prices consumers pay for everything from groceries to gasoline and heating bills to home mortgages.”

Tarbert concluded that U.S. markets are the global standard in terms of being “deep, open, liquid, transparent, and soundly regulated.” Tarbert committed “If confirmed as CFTC Chairman, I will be fully committed to ensuring they remain that way.”

Highlights of Topics Raised During the Hearing

  • Position Limits: Tarbert committed to finalizing a position limits rule.
  • CFTC Funding: In response to questions from Democratic Senators about whether he would support user-fees to fund the CFTC, he noted that decision should be made by Congress.
  • Regulation Automated Trading (Reg AT): Sen. Gillibrand raised concerns about automated trading and asked if Tarbert will revisit Reg AT implementation. Tarbert said he would.
  • European Market Infrastructure Regulation (EMIR) Implementation: Tarbert said he would continue to fight for U.S. authority over domestic derivatives clearinghouses. Tarbert stated we need to ensure that the CFTC remains the only regulator of US derivatives markets, and he noted we can have a collaborative relationship with foreign regulators, but the US must have the ultimate jurisdiction.

Sen. Roberts closed the hearing asserting that he believes that Tarbert is qualified for the position, and he thinks Sen. Stabenow agrees, and that the Committee will endeavor to report their approval out of Committee shortly.

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