July 7, 2021
Mr. Joseph Biden
President of the United States
The White House
1600 Pennsylvania Avenue, N.W.
Washington, DC 20500
Dear Mr. President,
Almost 100 years ago President Calvin Coolidge said, “The business of (the United States of) America is business.” The first business from before our nation’s founding that drove its development and rapid expansion was the cotton business. Cotton was the commodity that created international trade from the eighth century onward. To understand the cotton business and many origins of issues we still struggle with today, including race relations, I recommend you read the book “Empire of Cotton” by Sven Beckert.
According to Beckert, “In 1820, the U.S. exported 167.5 million pounds of cotton, which was 32% of all U.S. exports. By 1850, 67% of U.S. cotton was grown on land that had not been part of the U.S. a half a century earlier.”
Because of the importance of cotton to our nation’s beginnings and all the other commodities it residually drove the production of, the U.S. commodity and related derivatives markets are among the most important in the world. I am writing to you today to urge you to appoint a permanent chairperson of the Commodity Futures Trading Commission.
My name is John Lothian and for the last 21 years I have published a newsletter helping the global derivatives and capital markets industries manage a historic level of change in their market structure. I have the privilege of also serving as a member of the Technology Advisory Committee of the CFTC.
Our industry is too important to the U.S. and its leadership necessary for the world for us to linger during the first year of your administration without a duly nominated and confirmed CFTC chairman. We damage ourselves and our global standing by leaving the title “acting” in front of the CFTC chairman’s name. Have we not had enough use of “acting” unconfirmed government department, agency or commission heads recently?
The name that is most often suggested as someone you should nominate is the man you named acting chair, CFTC Commissioner Rostin Behnam. I took an informal survey of the derivatives industry’s leading legal sources who are readers of the John Lothian Newsletter and asked them for suggestions of who would be a good CFTC chairman and Behnam’s name was the one most frequently given.
I also believe Commissioner Behnam would be the best choice for the permanent chair of the CFTC, though there are several names that my readers from the legal profession offered who would also be excellent choices. I urge you to quickly move to nominate Commissioner Behnam as the chair of the CFTC and work to secure his confirmation.
In May, the Futures Industry Association’s CEO & President Walt Lukken, a former “acting” chairman of the CFTC, wrote to you saying that “naming a permanent chair, as well as nominees for other open seats to the Commission, will allow for the important work of the agency to continue at full strength and speed.”
He added that “as the Administration sets forth its economic agenda, we urge you to recognize the importance of the derivatives markets to the economy and work to expeditiously nominate a permanent CFTC chair. This will ensure the Commission has an equal seat among the domestic and international regulatory community and guarantees a cop on the beat that protects the markets and its participants.”
Former CFTC Commissioner Fred Hatfield, who recently stepped down from the board of directors of Intercontinental Exchange, Inc., shared this with me: “The Administration should recognize the CFTC’s importance to financial stability, especially after the increased responsibilities of Dodd Frank. If I were advising President Biden, I would call up Chair (Debbie) Stabenow and ask her opinion and how quickly she can move the nominee.”
From across the industry, each of the legal practitioners I asked agreed there was urgency to have a permanent CFTC chairman named and confirmed.
Some of the legal sources commented on the potential second-class status the CFTC was being relegated to as former CFTC chairman and now SEC Chairman Gary Gensler takes up issues in which the CFTC has interest. Without the clout and status of a fully nominated and confirmed chair at the CFTC to uphold the interests of the Commission, our industry is at a strategic disadvantage.
And the universal response is that “our markets are too important for the CFTC to be relegated to such a status.”
John J. Lothian
John Lothian News