WASHINGTON, D.C.— Cantrell Dumas, Director of Derivatives Policy, issued the following statement regarding the Commodity Futures Trading Commission’s (CFTC) approval of the Comparability Determinations orders for Japan, Mexico, the European Union, and the United Kingdom (four Comparability Orders).
“The CFTC’s approval today of the four Comparability Orders violates the law, lacks a factual basis, and is horrible policy. These requests are styled as coming from foreign countries, but they are made on behalf of the biggest global banks, including the major Wall Street banks like JPMorgan Chase, Goldman Sachs, and Citigroup. These cross-border requests are made because those megabanks banks don’t want to follow U.S. law; they want to substitute weaker foreign law and weaker foreign regulators. To prevent that, U.S. law requires the CFTC to conduct a robust analysis to ensure that the foreign law is in fact comparable to U.S. law, but the CFTC’s own analysis here proves beyond doubt that the foreign laws are in fact not comparable. The CFTC, nevertheless, approved the four Comparability Orders and is thereby outsourcing the protection of the U.S. financial system and hardworking Americans to foreign regulators who have failed miserably in the past to protect their own citizens.
“Much of the damage inflicted on the U.S. during the 2008 financial crash stemmed from the overseas activities of major American financial firms. These U.S.-based companies located some of their highest-risk operations in foreign countries to avoid being properly regulated in the U.S. However, proving the adage that ‘banks live globally, but die locally,’ when a major U.S. financial firm fails due in part to its overseas operations, the U.S. bears the brunt of the fallout. These banks organize their activities to take advantage of the weakest rules and weakest regulators wherever they may be around the globe. Thus, today’s action by the CFTC makes future financial crises—and bailouts paid for by U.S. taxpayers—more likely.
“We detailed in our comment letters (here, here, here and here) as well as in a fact sheet, that the CFTC’s approach to the comparability determinations is fundamentally flawed, inconsistent with the law and facts, and poor public policy. The CFTC needs to provide the public with much more transparency and stop substituting assertion for facts, evidence, data, and analysis. As happened in the past, the risks from bad decisions like this may not materialize quickly, but history shows that the American people will pay the price for the CFTC’s actions today.”
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