Sen. Elizabeth Warren (D-Mass.) hit out at Christopher Giancarlo, a top Republican financial regulator, describing a report he oversaw that downplayed energy market speculation as an embarrassment to his agency.
Warren said the paper was illegally assembled by a committee dominated by industry players and that its own research doesn’t even support its conclusions. In a letter sent on Thursday, she asked Giancarlo, a member of the Commodity Futures Trading Commission (CFTC), to walk back his endorsement of the analysis.
“This report, which bears the official stamp of a CFTC committee, is nothing more than a recitation of industry talking points, and it should be treated as such,” Warren wrote. “Because of the legal, substantive, and procedural irregularities, I ask that you withdraw this report and refrain from submitting it to the CFTC for consideration.”
The CFTC is currently considering rules that would restrict certain types of speculative activity. Late in 2013, it proposed a version of a regulation on “position limits” that is still under consideration. The paper attacked the initiative, which Giancarlo has also fiercely criticized in the past.
The CFTC consists of three commissioners appointed by the President with the advice and consent of the Senate. Giancarlo is the only Republican who sits on the commission. Two of its seats are vacant.
The report, which was also published on Thursday, was assembled by the CFTC’s Energy and Environmental Markets Advisory Committee. The panel is staffed almost entirely by individuals with direct ties to the financial industry, despite the Dodd-Frank Act ordering EEMAC to “appoint members with a wide diversity of opinion.” Giancarlo is the sole CFTC member who oversees the committee.
“You convened the EEMAC to begin a review of the proposed rule in February 2015,” Warren noted. “However, the membership of the Committee fails to meet its clear statutory obligation to reflect diverse views.”
She singled out one EEMAC member for criticism because he works for an energies derivatives exchange at the heart of a conflict of interest accusation that the senator leveled last year at Giancarlo.
“I wrote to you in February 2015 regarding concerns that the CME Group’s effort to purchase your former employer, combined with the unusual timing of sales of stock you held in that employer,” Warren explained. “You compounded this problem when you subsequently included a CME official on the EEMAC and then invited another CME official to appear as a witness at both EEMAC meetings in 2015.”
Warren also bemoaned how the EEMAC report and transcripts of committee meetings contain “very little real analysis” of the CFTC proposal at the heart of the matter.
“Instead of documenting a rigorous effort to analyze the need and impact of CFTC position limits, these transcripts detail meetings that appear to be self-congratulatory, back-slapping sessions of like-minded industry officials and their close allies who fancy themselves ‘in the business of providing modern civilization’–an actual quote from the proceedings,” she wrote.
Warren additionally criticized EEMAC for allowing a controversial, industry-tied academic to help write the paper, even though he wasn’t listed as a committee member until last week.
“The report is listed as written by Dr. [Craig] Pirrong and James Allison, but Dr. Pirrong was not an EEMAC member in February 2015 when the EEMAC meetings began,” she wrote. “Although Dr. Pirrong was listed as an attendee at the July 2015 meeting, it was not until February 17, 2016–just over one week before the report was released–that Dr. Pirrong was even listed as an EEMAC committee member.”
In forming her criticism, Warren cited New York Times reporting on Pirrong that described him as having “reaped financial benefits from speculators and some of the largest players in the commodities business” for taking part in “a sweeping campaign [by the financial industry] to beat back regulation.”
Government and energy industry officials have estimated that speculation over the past decade has caused oil prices to rise at times by between 15-30 percent.
