CFTC Commissioner Chilton Delivers Speech on Banks Owning Physical Commodities (with Lofchie Comment)

CFTC Commissioner Bart Chilton delivered a speech urging the Fed to reverse its policy of allowing banks to own physical commodities. Chilton stated that he wrote to Chairman Ben Bernanke urging him to rewrite the Volcker Rule in a "precise and surefooted fashion." Chilton explained he believes that banks owning physical commodities could render the Volcker Rule useless by obscuring "business risk." Commissioner Chilton suggested that banks should get back to banking.

Lofchie Comment:One of the problems that Dodd-Frank creates is too many regulators with confused and overlapping jurisdictions, and this is particularly true as to Volcker. It does not seem to me that the regulatory system benefits when a regulatory authority with no historical involvement or expertise in the business of banking or in bank powers must expend its resources in areas so far removed from its area of authority. Given all that the CFTC has on its plate, the agency would likely benefit from being permitted to stay closer to its home turf.

See: Chilton's full speech: "Cowboy Company."
See also: Craig Pirrong's related commentary "It's Always Something" (August 2, 2013).

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