Reply #22: CFTC to issue expanded trader reports this week [View All]

Wendy Gramm’s tenure as chairwoman of the Commodity Futures Trading Commission (CFTC) was defined by political transition: She was sworn in by a term-limited Ronald Reagan in February 1988 and served until January 20, 1993, former President Bill Clinton’s inauguration day. Just one week after Clinton’s November 1992 victory ensured that Wendy Gramm’s politically appointed chairmanship would end, she initiated a radical rulemaking procedure requested by — and benefitting — Enron. Gramm acted to curtail her own Commission’s authority over Enron’s business by muscling through a rule change that narrowed the definition of futures contracts, excluding Enron’s energy future contracts and “swaps” from regulatory oversight. While her aggressive tactics generated immediate criticism from government officials who feared Gramm’s lame-duck rule change would have severe negative consequences, Enron soon rewarded the Gramms with personal and professional financial assistance.

Under the Commodity Exchange Act1, the CFTC is charged with regulating futures contracts traded in an exchange (such as the New York Mercantile Exchange). At the same time, the Act explicitly excludes ordinary commercial futures forward contracts from the CFTC’s jurisdiction. This confusing legal distinction of what constitutes a futures contract was the source of a lawsuit by a disgruntled investor.