WASHINGTON – U.S. Senator Debbie Stabenow (D-Mich.), Chairwoman of the U.S. Senate Committee on Agriculture, Nutrition, and Forestry, today released the following opening statement at a hearing titled “Oversight of the Commodity Futures Trading Commission.” Live video of the hearing is available here.
I call this hearing of the U.S. Senate Agriculture, Nutrition, and Forestry Committee to order.
I welcome today’s witness, CFTC Chairman Russ Behnam, as we examine issues affecting our nation’s derivatives markets. Thank you for making yourself very accessible to the Committee since you took the helm at the CFTC. This is so important for effective oversight and transparency.
The last time this Committee held a general CFTC oversight hearing, in February 2018, the agency was finalizing rules in response to the 2008 financial crisis. Today, the CFTC and our markets face new challenges.
The pandemic tested the resiliency of our global food system. Labor shortages, transportation delays, and reduced consumer demand made it difficult for American farmers and ranchers to run their businesses and plan for the future. Just as the world began to recover from COVID-related supply chain disruptions, Russia invaded Ukraine, triggering global grain and fertilizer shortages and driving up prices for food and energy.
Meanwhile, we are facing the effects of the climate crisis through record-breaking storms, heatwaves, and droughts—all of which are devastating for farmers and ranchers. Extreme weather events, supply chain disruptions, and rising input prices are costing farmers more money and leading to higher prices for consumers.
This is why our derivatives markets are so important.
Agricultural producers trade futures to manage risk and provide greater certainty around how much they will earn from, and pay for commodities. It is the CFTC’s job to make sure these markets are working properly and are free from abuse, particularly in times of stress when our producers need them the most.
Against this backdrop, the steady drumbeat of technology is changing the way financial markets operate—and who uses them. It is now possible to trade from almost anywhere at any time. Futures exchanges are offering more products geared toward individuals, and many people hold commodity funds in their retirement plans.
Crypto assets promise everyday Americans an easy way to speculate in financial markets, but in reality, they are volatile and riddled with fraud, as we have seen. The massive customer losses caused by this misconduct highlight exactly why we need federal oversight of the crypto industry, and I remain committed to working with my colleagues to hold crypto companies to the same rules as traditional financial firms.
As more retail investors trade futures and crypto assets, the CFTC must ensure its customer protections are suitable for this group of investors. Customers should have access to education and information about their investments, presented in a way that is appropriate for their level of experience. Financial markets must be fair for all participants; free of conflicts of interest that give the few an unfair advantage over the many.
And while the digital transformation of our financial system brings efficiencies, it also exposes vulnerabilities. Cyberattacks are a prominent threat to our financial stability and our national security. The CFTC must be vigilant in protecting derivatives markets from cyber threats. I would like to hear whether additional authorities or resources are needed to meet this challenge.
Our nation’s derivatives markets are fundamentally different than they were 15 years ago, in the wake of the financial crisis. Yet Congress has not reauthorized the CFTC since 2008. This is long overdue. And the Commission’s resources have not kept pace with their ever-expanding responsibilities, including monitoring the $350-trillion-dollar global swaps market.
We have recently heard criticism that the CFTC is too small and does not have the resources to take on additional responsibilities as commodity markets evolve.
I reject this thinking. The CFTC’s mission is too important.
In the 15 years since the agency was last reauthorized, the CFTC has received $3.5 billion in appropriations. In that time, the CFTC has imposed nearly $20 billion in penalties. This is a remarkable return on investment for the American people, and demonstrates the agency’s commitment to rigorous law enforcement. I hope we can come together to support more robust funding for the agency.
The work of the CFTC is critically important to our nation’s economy. I look forward to hearing today about how the agency is responding to new challenges, and how Congress can assist in that effort.
With that, I’ll turn to Ranking Member Boozman for any opening remarks he’d like to make.