By Mark S. Nelson, J.D.
The Senate confirmed Heath Tarbert to succeed J. Christopher Giancarlo as the CFTC’s next chairman. Tarbert’s taking of the helm at the CFTC continues a post-Dodd-Frank Act trend of presidents selecting a chairman with prior experience at the Treasury Department. Tarbert easily cleared two procedural votes one day ago on his nominations to be a CFTC commissioner and to be the agency’s chairman. Tarbert was later confirmed to be a commissioner by a vote of 85-9 and to be chairman by a vote of 84-9.
Complicated rulemakings ahead. Upon being sworn in as CFTC chairman, Tarbert will face a limited budget and pressing rulemakings on challenging topics. Chief among these rulemaking priorities will be the handling of position limits. Tarbert testified at his confirmation hearing that observers should remember these rules deal with "speculative" position limits and that bona fide hedgers should be able to use an exemption. The unfinished rulemaking on Regulation AT (Automated Trading) also awaits the CFTC’s next chairman.
Tarbert generally was well-received by the Senate Agriculture Committee during its hearing on his nomination. Tarbert told lawmakers of the benefits of Dodd-Frank Act swaps and derivatives reforms, while also stating that the CFTC must balance innovation in financial markets versus protecting markets and customers. Ranking Member Debbie Stabenow (D-Mich) had cautioned Tarbert that the agency must finish its Dodd-Frank Act rulemakings. Tarbert was also questioned about his views on a wider range of topics, including enforcement, cross-border rules, and cybersecurity.
Change in leadership expected in July. Although it is unclear exactly when Tarbert will be sworn in as the CFTC’s chairman, outgoing Chairman Giancarlo first suggested in a speech in London that he would formally step down in mid-July and later clarified in a statement congratulating Tarbert that he was committed to remaining chairman until July 15.
“During my time of service, it has been a priority to transform the CFTC into a 21st Century regulator for today’s digital markets. With Dr. Tarbert’s confirmation, I know the agency is in safe hands to continue this transition,” said Giancarlo.
U.S. Treasury Secretary Steven Mnuchin issued a statement in which he acknowledged Giancarlo’s “successful” chairmanship and said that Tarbert, who is currently the acting
Under Secretary for International Affairs at Treasury, would promote competitive commodities markets as CFTC chairman. “I am grateful to Heath for his service to the nation, and in particular his leadership at Treasury where he has worked to promote U.S. interests, financial stability, and economic growth with foreign governments and multilateral organizations. Heath also led Treasury’s efforts with Congress to modernize the Committee on Foreign Investment in the United States (CFIUS),” said Mnuchin. “I look forward to working with Heath in his new capacity and know that he will advance CFTC’s efforts to foster transparent, competitive, and financially sound markets.”
Senator Pat Roberts (R-Kan), chairman of the Senate Agriculture Committee, likewise praised Tarbert's confirmation. “I applaud the Senate’s quick, bipartisan action to confirm Dr. Tarbert to head the CFTC. He has the support of a range of agricultural groups, and I’m confident he will lead the CFTC well.”
The CFTC is an independent federal agency established in the mid-1970s. Under Commodity Exchange Act Section 2(a)(2)(B), the chairman is the CFTC's chief administrative officer and serves as chairman at the president's pleasure. The President, however, may appoint a new chairman at any time subject to the advice and consent of the Senate, but the commissioner who was chairman may finish his term as a commissioner.