Congress will reauthorize the Commodity Futures Trading Commission next spring "in some form," Sen. Patrick J. Leahy (D-Vt.) told a gathering of leading brokerage and commodity firm executives in a major policy speech delivered in New York City yesterday.
Speculation that the commission, established in 1975, would be dismantled is unrealistic, he said.
"To think for a moment that Congress would decide to deregulate a trillion dollar industry whose orderly functioning is vital to the national interest is naive," he said in remarks prepared for his address to the Futures Industry Association, a trade group. "Your industry has grown too large and too important to be governed by gentlemanly rules, particularly when those rules are so susceptible to the unscrupulous few.
Leahy indicated that alternatives in reauthorizing the commission as an independent agency - such as merging it into the Departments of Treasury or Agriculture or placing it withink the Securities and Exchange Commission - are unlikely to win congressional support.
"I am very suspect of these proposals," he said. On the SEC alternative, he said, "I do not understand the merit of merging a giant into a lesser entity, comparatively speaking. Trading in commodity futures is four times the volume of trading in securities on the two principal stock exchanges, and since the nature of the markets is so dissimilar. I do not see the value or wisdom of a merger."
Leahy, who is to conduct the Senate Agriculture Committee hearings during which the agency's performance will be serutinized, continued, "It is my belief that relocation is not the solution - that what must be done is evaluate the CFTC's performance and make whatever procedural changes are necessary."
Leahy's speech, the first major polley declaration by a key member of the oversight committee for the CFTC, appeared to be an attempt to assure commodity industry officials that Congress is aware of the sector's importance to the economy as well as ask for their participation during the review process.
In light of some measure of new or renewed awareness on the part of the Congress, you can expect the legislation reauthorizing the CFTC to try to make the regulatory process impartial, efficient, and responsive," he said. "The government is not out to eliminate risk and profit from the commodities market through heavy handed regulation."
He told the businessmen that the review of the agency will consider four key areas, the politicization of the CFTC, its administrative procedures, structure and self-regulation.
He noted, "You should expect expeditions as well as fair treatment at the hands of the commission. If additional personnel are necessary to reduce backlogs, we will provide the funds necessary. If better training of personnel is important, we will upgrade the CFTC's training procedures."
Addressing one of the major issues raised by CFTC critics, the appointment of the chairman and four commissioners, he said. "Another question which is receiving considerable attention is whether the current nomination procedure and term of office to the commissioners is the right approach." This remark apparently relerred to the plans of some Senate and House members to propose altering the term of the chairman from a flat five years to one "at the pleasure of the President," which would give President Carter the right to immediately name his own candidate for the chairmanship.