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Senator Warren Asks CFTC to Withdraw EEMAC Report on Position Limits's picture
Commentary by Steven Lofchie

Senator Elizabeth Warren wrote to CFTC Commissioner J. Christopher Giancarlo asking that he withdraw the Energy and Environmental Markets Advisory Committee ("EEMAC") report on the CFTC's proposed rule on position limits for commodities futures and swaps until the CFTC reconvenes a committee that "complies with the law and that addresses both the procedural and factual errors in the present product."

Senator Warren cited three principal problems with the EEMAC's report:

  • the EEMAC consists almost entirely of energy industry leaders, which appears to violate Dodd-Frank Section 751;
  • the record of the EEMAC's work reflects "significant procedural irregularities" that "resulted in major flaws and mischaracterizations" in the report; and
  • the report's conclusions were not supported by the record before the EEMAC, and the report was adopted without public discussion of its findings and conclusions and with no public vote.

She also specifically expressed concern about the decision to include two witnesses at the EEMAC's hearing: 1) a representative from the CME Group, “an energy derivatives exchange,” and 2) Dr. Craig Pirrong.

Senator Warren concluded that the report is "nothing more than a recitation of industry talking points, and should be treated as such."


This is at least the second time that Senator Warren publicly launched a personal attack against an academic who has taken a position with which the Senator disagrees. In both cases, the Senator asserted that the academics withheld information about their beliefs or funding. Her assertions rest on uncertain ground. (See the Senator's attack on Professor Robert Litan in this news article; see also Mr. Pirrong's defense of himself on his blog, Streetwise Professor. These broadsides are in addition to Senator Warren's personal attacks against SEC Chair Mary Jo White.) Attacks by the Senator on those who disagree with her can serve only to chill discussion on issues of financial regulation, perspectives which serve to benefit all concerned.

As to the notion that Craig Pirrong somehow concealed his views on energy matters, the professor has a blog ( on which he expresses them quite consistently, clearly and openly. His position is no more hidden than is Senator Warren's. The Senator can disagree with his views, of course, but the claim that they are hidden seems not only unjustified, but inconsistent with her description of him in the letter as a well-known advocate in this space.

As to the substance of the Senator's objections to the EEMAC's report, the relevant language from Dodd-Frank Section 751 is as follows: The EEMAC shall have 9 members. The Committee shall "serve as a vehicle for discussion and communication on matters of concern to exchanges, firms, end users and regulators. . . " The members shall have a "wide diversity of opinion and who represent a broad spectrum of interests, including hedgers and consumers." Here are links to the lists of EEMAC Members and EEMAC Associate Members. There are distinguished people in both groups, possessing a wide range of viewpoints and economic interests; e.g., both buy-side and sell-side. Even if the Senator believes that a majority of the Committee's members were inclined to disagree with her, this is not a group to be cowed. There was legitimate dissent and debate by these members.

The Senator criticizes the EEMAC for including representatives of "public utilities," whom one would think would be inclined to favor regulation that might drive competing buyers (i.e., speculators) out of the market. The Senator also appears to criticize the decision to have representatives of the "government" on the Committee, whom she seems to imply would not be "objective" for reasons that she does not explain. Upon reading the letter more closely, it is easy to speculate that Senator Warren believes that there are likely alternative, more "objective" government employees who would have favored her views.

The Senator's claim that the EEMAC report "dramatically mischaracterizes the recorded positions of its members" is not serious. The Committee voted 8-1 in favor of the report. Again, one can clearly disagree with the findings of the report, but it is hard to understand how exactly the report mischaracterizes an 8-1 vote. Senator Warren cites a 2006 report that is consistent with her views, but there are other studies that are inconsistent with Senator Warren's views. There ought not to be any implication that the dispute over position limits must end with one report that Senator Warren elects to single out.

It is simply hard to see how anyone reading the newspapers these days can believe that energy position limits are needed to either maintain a sufficient energy supply or hold prices down. With so many producer nations (Iran, Russia, Saudi Arabia, Kuwait, Venezuela, the United States, Mexico, Canada) trying to bring oil and other energy products to market, it seems obvious that the power of suppliers to increase deliveries overwhelms any ability of speculators to store oil and create an artificial price spike. If there were even the briefest price spike, wouldn't the energy suppliers (including those in the United States) rush to take advantage of it by pumping more oil?

Most worrisome about the Senator's letter is not her stance on position limits nor that she seems disinclined to modify that stance in light of current events. Most worrisome is that the presentation of her views is done in a way that might discourage the presentation of legitimate alternative views.

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