This week Barney Frank, a representative from Massachusetts who is also calling it quits, called for the [Securities and Exchange Commission] to be merged with its perpetual turf rival, the Commodity Future Trading Commission. The idea makes abundant sense because, as the congressional report on the collapse of MF Global makes clear, whatever competence each lacks individually, collectively they are even worse. They fail to share critical information, issue conflicting orders, and add (inevitably costly and confusing) bureaucracy rather than clarity and stability to the system.
I agree that it makes no sense for the SEC and CFTC to remain separate. But they will never merge. Why not? Because the SEC is regulated by the Senate Banking and House Financial Services Committees, while the CFTC is regulated by the House and Senate Agriculture Committees. An agency merger thus would deprive one committee in each body (probably Agriculture) of jurisdiction over an important regulatory agency. And the old bulls that run those committees are no more willing to give up jurisdiction than Second Amendment diehards are willing to give up their guns. After all, why let all those campaign dollars that lobbyists seeking to influence Congress to influence the CFTC go to members of the finance committees instead of staying home in Agriculture where they belong. Accordingly, we are not surprised to learn that:
Rep. Collin Peterson, D-Minn., ranking member of the House Agriculture Committee, opposes merging the agencies, according Liz Friedlander, Democratic communications director for the panel. On the other side of the Capitol, Sen. Pat Roberts, R-Kan., chairman of the Senate Agriculture Committee, also is against a merger, according to his spokeswoman, Sarah Little. ...
The bigger problem is overcoming the agriculture committees' recalcitrance, according to Cornelius Hurley, professor of law at Boston University and director of its Center for Finance Law and Policy. Lawmakers on the ag panels can raise money from Wall Street firms, if CFTC policy remains on their agenda.
“Form is leading over substance here,” Mr. Hurley said. “For fundraising and [to protect] their own turf, they insist on continuing in the same capacity.”
Precisely.
