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S. HRG. 113–555 

COMMODITY FUTURES TRADING COMMISSION 

NOMINATIONS OF TIMOTHY G. MASSAD, 

SHARON Y. BOWEN AND 

J. CHRISTOPHER GIANCARLO 

HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION AND FORESTRY 

UNITED STATES SENATE 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

MARCH 6, 2014 

Printed for the use of the 

Committee on Agriculture, Nutrition and Forestry 

( 

Available via the World Wide Web: http://www.fdsys.gov/ 

COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY 

DEBBIE STABENOW, Michigan, Chairwoman 

PATRICK J. LEAHY, Vermont 

TOM HARKIN, Iowa 

SHERROD BROWN, Ohio 

AMY KLOBUCHAR, Minnesota 

MICHAEL BENNET, Colorado 

KIRSTEN GILLIBRAND, New York 

JOE DONNELLY, Indiana 

HEIDI HEITKAMP, North Dakota 

ROBERT P. CASEY, Jr., Pennsylvania 

JOHN E. WALSH, Montana 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

PAT ROBERTS, Kansas 

SAXBY CHAMBLISS, Georgia 

JOHN BOOZMAN, Arkansas 

JOHN HOEVEN, North Dakota 

MIKE JOHANNS, Nebraska 

CHARLES E. GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

CHRISTOPHER J. ADAMO, Majority Staff Director 

JONATHAN J. CORDONE, Majority Chief Counsel 

JESSICA L. WILLIAMS, Chief Clerk 

THOMAS ALLEN HAWKS, Minority Staff Director 

ANNE C. HAZLETT, Minority Chief Counsel and Senior Advisor 

(II) 

(III) 

C O N T E N T S 

Page 

HEARING(S): 

Commodity Futures Trading Commission Nominations of Timothy G. Massad, 

Sharon Y. Bowen and J. Christopher Giancarlo ............................................... 1 

Thursday, March 6, 2014 

STATEMENTS PRESENTED BY SENATORS 

Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan, Chairwoman, Committee on Agriculture, Nutrition and Forestry ............................ 1 

Cochran, Hon. Thad, U.S. Senator from the State of Mississippi ....................... 3 

Walsh, Hon. John E., U.S. Senator from the State of Montana .......................... 3 

Johanns, Hon. Mike, U.S. Senator from the State of Nebraska .......................... 5 

Blumenthal, Hon. Richard, U.S. Senator from the State of Connecticut ............ 8 

Witnesses 

Massad, Timothy G., of Connecticut, to be Chairman and a Commissioner 

of the Commodity Futures Trading Commission ............................................... 6 

Bowen, Sharon Y., of New York, to be a Commissioner of the Commodity 

Futures Trading Commission .............................................................................. 11 

Giancarlo, J. Christopher, of New Jersey, to be a Commissioner of the Commodity Futures Trading Commission ................................................................. 9 

APPENDIX 

PREPARED STATEMENTS: 

Roberts, Hon. Pat ............................................................................................. 34 

Cochran, Hon. Thad ......................................................................................... 35 

Thune, Hon. John ............................................................................................. 36 

Bowen, Sharon Y. ............................................................................................. 38 

Giancarlo, J. Christopher ................................................................................. 41 

Massad, Timothy G. ......................................................................................... 45 

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Public 5 day letter, Committee questionnaire and Office of Government 

Ethics Executive Branch Personnel Public Financial Disclosure Report 

filed by Sharon Y. Bowen ............................................................................. 52-86 

Public 5 day letter, Committee questionnaire and Office of Government 

Ethics Executive Branch Personnel Public Financial Disclosure Report 

filed by Christopher J. Giancarlo ................................................................87-116 

Public 5 day letter, Committee questionnaire and Office of Government 

Ethics Executive Branch Personnel Public Financial Disclosure Report 

filed by Timothy G. Massad ......................................................................... 117-156 

QUESTION AND ANSWER: 

Bowen, Sharon Y.: 

Written response to questions from Hon. Debbie Stabenow ......................... 158 

Written response to questions from Hon. Pat Roberts .................................. 187 

Written response to questions from Hon. Tom Harkin ................................. 161 

Written response to questions from Hon. Sherrod Brown ............................ 166 

Written response to questions from Hon. Amy Klobuchar ........................... 169 

Written response to questions from Hon. Joe Donnelly ................................ 171 

Page

IV 

Bowen, Sharon Y.—Continued 

Written response to questions from Hon. Heidi Heitkamp ........................... 172 

Written response to questions from Hon. John E. Walsh ............................. 175 

Written response to questions from Hon. Thad Cochran .............................. 177 

Written response to questions from Hon. Saxby Chambliss ......................... 192 

Written response to questions from Hon. Charles Grassley ......................... 194 

Written response to questions from Hon. John Thune .................................. 195 

Giancarlo, Christopher: 

Written response to questions from Hon. Debbie Stabenow ......................... 199 

Written response to questions from Hon. Pat Roberts .................................. 232 

Written response to questions from Hon. Tom Harkin ................................. 204 

Written response to questions from Hon. Sherrod Brown ............................ 213 

Written response to questions from Hon. Amy Klobuchar ........................... 216 

Written response to questions from Hon. Joe Donnelly ................................ 218 

Written response to questions from Hon. Heidi Heitkamp ........................... 220 

Written response to questions from Hon. John E. Walsh ............................. 223 

Written response to questions from Hon. Thad Cochran .............................. 225 

Written response to questions from Hon. Saxby Chambliss ......................... 238 

Written response to questions from Hon. Charles Grassley ......................... 240 

Written response to questions from Hon. John Thune .................................. 241 

Massad, Timothy G.: 

Written response to questions from Hon. Debbie Stabenow ......................... 246 

Written response to questions from Hon. Pat Roberts .................................. 274 

Written response to questions from Hon. Tom Harkin ................................. 248 

Written response to questions from Hon. Sherrod Brown ............................ 253 

Written response to questions from Hon. Amy Klobuchar ........................... 256 

Written response to questions from Hon. Michael Bennet ........................... 258 

Written response to questions from Hon. Joe Donnelly ................................ 259 

Written response to questions from Hon. Heidi Heitkamp ........................... 261 

Written response to questions from Hon. John E. Walsh ............................. 264 

Written response to questions from Hon. Thad Cochran .............................. 266 

Written response to questions from Hon. Saxby Chambliss ......................... 279 

Written response to questions from Hon. Charles Grassley ......................... 281 

Written response to questions from Hon. John Thune .................................. 282 

(1) 

COMMODITY FUTURES TRADING COMMISSION 

NOMINATIONS OF TIMOTHY G. MASSAD, 

SHARON Y. BOWEN AND 

J. CHRISTOPHER GIANCARLO 

Thursday, March 6, 2014 

UNITED STATES SENATE, 

COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY, 

Washington, DC 

The Committee met, pursuant to notice, at 10:30 a.m., room 

328A, Russell Senate Office Building, Hon. Debbie Stabenow, 

Chairwoman of the Committee, presiding. 

Present or submitting a statement: Senators Stabenow, Brown, 

Klobuchar, Donnelly, Heitkamp, Casey, Walsh, Cochran, Chambliss, Hoeven, Johanns, and Thune. 

STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR 

FROM THE STATE OF MICHIGAN, CHAIRWOMAN, COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY 

Chairwoman STABENOW. Good morning. The Senate Agriculture, 

Nutrition, and Forestry Committee will come to order. 

As we begin, this is the first meeting we have had since the passage of the Farm Bill, and I just want to say thank you to every 

member of the Committee. I am very proud of the fact that the bill 

originated in the Senate, not once but twice, and Senator Cochran 

and I were, I know, both are very proud to have the opportunity 

to work with all of you. 

I hope that now that we are done I am sure it is true that you 

are feeling as good as we are that it is not only done but that it 

is the product that it is. 

Thanks very much. I am very grateful and proud of not only of 

our whole Committee but of all the staff and having a chance just 

to say a little bit of a thank you this morning before the meeting 

just is a small—— 

[Applause.] 

Chairwoman STABENOW. Yes, to all of our staff. Thank you. 

Lots of details, lots of work. I tell people all the time that with 

12 titles it is like 12 separate bills, any one of which could be a 

major piece of legislation on its own. 

The staff work really, really well together and I want to thank 

Chris Adamo on my team and T.A. Hawks on Senator Cochran’s 

team for the great work. 

I also want to welcome and recognize our newest member of the 

Committee. 

2 

Senator Walsh, we are glad to have you and we know you are 

going to continue the strong Montana presence on this Committee 

and look forward to working with you to make sure that your farmers and ranchers have what they need, as we go forward on so 

many issues including implementation of the Farm Bill. 

I know from Senator Baucus that the Big Sky State’s economy 

was something that was always on his mind, and I know already 

from talking to you that it is on yours as well. So, welcome. 

Senator WALSH. Thank you very much. 

Chairwoman STABENOW. Yes, it is good to have you. 

I know in a moment that Senator Blumenthal did want to come. 

When he comes, we will let him. He wanted to have the opportunity to introduce Timothy Massad and we will let him do that 

at that point, I do not believe I see him. So, we will proceed with 

opening statements and then turn to him when he arrives. 

We are meeting this morning, as we all know, to consider the 

nomination of Timothy Massad to be the next Chairman of the 

Commodity Futures Trading Commission as well as the nominations of Sharon Bowen and Christopher Giancarlo to be Commissioners at the CFTC. 

We very much appreciate all of you being here. I know that family members are here as well, and we certainly, as you make your 

opening statements, want to give you an opportunity to introduce 

your families. 

The last time we met as a Committee to confirm a new Chair, 

we were in the middle of the global financial crisis so deep that 

eight million jobs were lost. 

Today, the economy is adding jobs and our financial markets are 

getting safer although we certainly have more to do on both accounts, but thanks in part to the work of the Commission, the Wall 

Street Reform and Accountability Act ushered in a new era of accountability and transparency in the markets, but that only works 

if the law is implemented and enforced correctly, and a significant 

part of that falls to the important work of the CFTC. 

You have been nominated, each of you, to implement the law 

that this Committee helped to write and Congress passed to help 

ensure that we do not have another global financial crisis and all 

that came with it. 

If confirmed, you will have the opportunity to make sure the future, swaps, and options markets are safe for trading and free of 

fraud and manipulation. 

These markets are important to the everyday lives of Americans 

as we all know, including companies in each of our states and consumers in all of our states. You will need to make sure companies 

like commercial end-users, energy firms, and agriculture producers 

are able to use these markets to manage their risks and to find fair 

prices for a wide range of products from corn to natural gas to aluminum. 

If confirmed, you will also need to ensure that the agency is 

keeping a watchful eye on market participants like clearinghouses, 

exchanges, swap dealers, to make sure that they are managing risk 

carefully and doing all that they can to prevent market abuse. 

You will have an obligation to make sure that we never see another MF Global or Peregrine Financial shatter faith in either the 

3 

markets or the ability of regulators to oversee these markets. This 

is an enormous responsibility and it is our job to work with you to 

make sure that you are up to the task. 

The Commission has much more responsibility than it ever did 

even a few years ago, unfortunately, with very limited resources 

which we also need to address as a Committee. 

The agency needs to harmonize with regulators around the world 

and balance between moving forward with strong reform and being 

sensitive to different regulatory approaches and time lines for reforms. 

The agency needs to work closely with other U.S. agencies to 

share information, remove unnecessary differences in regulations; 

and the agency needs to keep up with technological changes like 

automated trading and challenges like cyber security threats. 

I have enjoyed meeting with each of you and look forward to your 

answers today; and if confirmed, I fully expect each of you to work 

with this Committee, with our members, with Congress and to 

show a commitment to open dialogue and pragmatic problem-solving. We are committed to that on this Committee. 

So, I thank each of you and would now turn to the distinguished 

Senator from Mississippi, my Ranking Member, Senator Cochran. 

STATEMENT OF HON. THAD COCHRAN, U.S. SENATOR FROM 

THE STATE OF MISSISSIPPI 

Senator COCHRAN. Madam Chairman, we appreciate your leadership as Chair of this important exercise in reviewing the nominations that are being made by the Administration for service on the 

Commodity Futures Trading Commission. 

We have before us nominees including Timothy Massad to be 

Chairman and a Commissioner of the CFTC, Sharon Bowen to be 

Commissioner, and Christopher Giancarlo to be a Commissioner of 

the CFTC. 

First of all, I want to congratulate each of you for accepting the 

nomination to serve on this important Commission. It is our responsibility to review the nominations and to make a recommendation to the full Senate regarding confirmation and to also, through 

oversight, be sure that the intent and the clear language of the 

statute creating the Commission are adhered to and that the purposes for which the Commission was created are well served. 

With that, I am happy to defer any additional comments and 

look forward to the question and answer period of this hearing. 

Chairwoman STABENOW. Thank you for much, Senator Cochran; 

and in the interest of time, we will ask other members, as we always do, to put their opening statements into the record and I do 

want to say, though, before giving the oath to each of our nominees 

I know that, Senator Walsh, we want to give you an opportunity 

as the newest member if you would like to make any comments. 

STATEMENT OF HON. JOHN E. WALSH, U.S. SENATOR FROM 

THE STATE OF MONTANA 

Senator WALSH. Thank you, Chairman Stabenow, and thank you 

for the kind words. I am very impressed by your success on the 

Farm Bill as all Montanans are. It was a monumental task and 

you helped pull together a bill that works for farmers and ranchers 

4 

across the country and that includes Montana, and so we all thank 

you very much for that. 

I want to thank you for your leadership of this Committee. I look 

forward to working with you in the future. 

I am excited to represent Montana on the Senate Agriculture 

Committee. As many know, one in five Montana jobs is tied to agriculture and Montana is one of the most rural states in our country. 

As the only member of Montana’s congressional delegation on the 

Ag Committee, I will have the opportunity to bring Montana’s agriculture and rural priorities to the forefront of the national discussion, and this is a responsibility that I take very seriously, whether 

it is providing a farm safety net against natural disasters, spurring 

rural economic development, or promoting our top-notch products 

around the world, programs under this Committee’s jurisdiction 

help keep Montana strong. 

This is a critical time as well. As a member of this oversight committee, I will fight to make sure the Department of Agriculture 

keeps Montana in mind as they move to implement policies in the 

new Farm Bill. 

Now, on to the task at hand—the CFTC nominees. The regulators were not on the clock when MF Global stole customer funds, 

and Montana producers and businesses were the victims. It took 

them years to get their money back, money that they believed was 

as safe with MF Global as it was in the bank. That must never 

happen again. 

I look forward to hearing your ideas for further reforms to consider as we move into re-authorization, and you can bet that I will 

fight for Montana priorities every step of the way. 

Thank you, Madam Chairwoman. 

Chairwoman STABENOW. Thank you very much. Again we are 

proud to have you and, of course, implementation of the Farm Bill 

is something we all care deeply about and we will be working together with the Department to make sure that is done right. 

So, let me turn now and I believe that I do not yet see Senator 

Blumenthal. Certainly if he comes, we are happy to accept his 

thoughts but we are going to first begin by asking each of you to 

stand. You can stand together and raise your right hand. 

Do you swear or affirm that the testimony that you are about to 

give is the truth, the whole truth, and nothing but the truth so 

help you God? 

Mr. MASSAD. I do. 

Ms. BOWEN. I do. 

Mr. GIANCARLO. I do. 

Chairwoman STABENOW. Do you agree to appear and testify before a duly constituted Committee of Congress? 

Mr. MASSAD. I do. 

Ms. BOWEN. I do. 

Mr. GIANCARLO. I do. 

Chairwoman STABENOW. Thank you very much. You may be 

seated. 

Let me proceed to introduce each of you and then we will be 

happy to take opening statements. As you know, we are happy to 

take whatever information you have for the record. We would ask 

5 

that your verbal comments be five minutes so that we have ample 

time for questions. 

Mr. Timothy Massad is currently the counsel to the Secretary 

had the United States Treasury. He was the Assistant Secretary 

for Financial Stability at the Treasury from June 2011 to October 

2013 where he supervised the wind down of TARP, the Troubled 

Asset Relief Program. Previously, he worked for the Office of Financial Stability at Treasury and was a partner at the law firm of 

Cravath, Swaine, and Moore. 

Secondly, we have Sharon Bowen, who is a partner in the New 

York office of Latham and Watkins where she represent clients on 

a range of corporate finance and securities transactions, including 

mergers and acquisitions, private equity and corporate restructuring. 

She was appointed by President Obama to serve as the Vice 

Chairman, and then Acting Chair of the Board of Directors of the 

Securities Investment Protection Corporation. 

Last and certainly not least, Christopher Giancarlo. Let me proceed and then I will turn to Senator Johanns who wanted to make 

a comment as well. 

Mr. Giancarlo is an executive vice president of GFI Group which 

provides wholesale market brokerage services in a range of global, 

over-the-counter, and exchange listed cash and derivatives markets. 

He began his career as a lawyer practicing corporate and securities law at the New York firm Brown, Raysman, Millstein, Felder 

and Steiner. Until early 2013, Mr. Giancarlo was the Chairman of 

Wholesale Markets Brokers Association, Americas, which represents the world’s largest wholesale brokers. 

Senator Johanns, I believe you also wished to provide some remarks. 

STATEMENT OF HON. MIKE JOHANNS, U.S. SENATOR FROM 

THE STATE OF NEBRASKA 

Senator JOHANNS. Madam Chair, thank you very much. I appreciate the privilege of just offering a few words because I cannot be 

here too long today. 

I also want to say congratulations on the Farm Bill. It was a remarkable achievement; and for somebody who has been on the 

other side of that from the administration standpoint, they are not 

only tough to put together, they are tough to get the votes to get 

passed. So, congratulations and to our Ranking Member too. He 

was a great partner in that effort. 

I want to say to each of you welcome; but if I might just use a 

little speaker’s privilege to say to you, Mr. Giancarlo, a special welcome. As you know I know family members very well and they 

speak very highly of you, and for all of you this is a great day. Your 

family members can be proud that you are here, that you have 

been nominated, and I wish you all the best. 

If I were to make one pitch, I would ask you to take a very close 

look at the end-user issue. I do not think there is any controversy 

over this, and we are hoping to get that to the finish line. 

So, I will end there. I will not abuse the privilege of offering a 

few words but thank you, Madam Chair. 

6 

Chairwoman STABENOW. Thank you very much. 

Mr. Massad, we will start with you. Welcome. 

TESTIMONY OF TIMOTHY G. MASSAD, OF CONNECTICUT, NOMINATED TO BE CHAIRMAN AND A COMMISSIONER OF THE 

COMMODITY FUTURES TRADING COMMISSION 

Mr. MASSAD. Thank you. Chairwoman Stabenow, Ranking Member Cochran, and members of the Committee, it is a privilege to appear before you today, it is a privilege to appear before you today 

as President Obama’s nominee to be the next Chairman of the 

Commodity Futures Trading Commission. 

I would like to introduce the members of my family who are here 

with me today. My wife Charlotte, my children Emil and Jayne, my 

mother Delores, and my brother Steve. 

Chairwoman STABENOW. Let us have them stand up so that we 

can welcome them officially. Welcome. 

[Applause.] 

Mr. MASSAD. My children may sneak out early to get back to 

school. I am deeply indebted to them for their love and support. 

For decades, the CFTC has had the vital mission of preventing 

fraud and manipulation in our futures markets. These markets are 

critical to many farmers, ranchers, and businesses. 

Today, the CFTC’s role is even more important, because it has 

the responsibility to bring much-needed regulation to the markets 

for over-the-counter derivatives. I am honored to have the opportunity, if confirmed, to lead the CFTC in carrying out this essential 

mission. 

I have spent the last five years helping our nation recover from 

the worst financial crisis since the Great Depression. Excessive risk 

related to derivatives, particularly at American International 

Group, was one of many factors that contributed to that crisis. 

Today, we have recovered every dollar of the taxpayer funds committed to prevent the collapse of AIG, as well as a profit; and indeed, today, we have recovered more on all the crisis investments 

than was disbursed. 

But it was awful and unfair that we had to take these actions 

in the first place. We must never forget that the true cost of the 

financial crisis is not the fiscal cost of the programs. It is the millions of jobs lost, the homes foreclosed, the retirements postponed 

and the dreams deferred. That is why it is so important to continue 

to implement strong financial reform; and that is a major reason 

why I embrace the opportunity to lead the CFTC at this time. 

I would like to take a moment to tell you about my background 

before briefly discussing the issues facing the CFTC. I was born in 

Louisiana and lived in Texas, Oklahoma, and Connecticut as a 

child. 

My grandparents were immigrants from Lebanon who came to 

this country as teenagers, barely able to speak English and with 

nothing more than a suitcase. 

My parents grew up during the Great Depression. They worked 

hard to provide our family with more opportunities than they had, 

and I have been fortunate as a result. 

I spent twenty-five years in private law practice before coming to 

Washington to serve my country. During my career as a lawyer, I 

7 

worked on all types of complex financial transactions, and I worked 

throughout the world, including in New York, London and Hong 

Kong. 

I had substantial experience with derivatives as a lawyer. I 

helped to draft the original standardized agreements for swaps in 

the late 1980s. Throughout my career as a lawyer, I helped many 

businesses negotiate and execute transactions to hedge exposures 

in commodities and derivatives markets. I saw from personal experience how important these markets are to businesses of all types, 

including those of farmers and ranchers. 

The United States of America has the best financial markets in 

the world, the most efficient, most innovative and best regulated; 

and if confirmed as the next Chairman of the CFTC, I want to help 

make sure that the United States continues to lead the world. 

Chairwoman Stabenow, If I may pause, I know Senator 

Blumenthal’s time is limited. Should I perhaps break and allow 

him to speak? 

Chairwoman STABENOW. If you have a moment, Senator 

Blumenthal, we can allow you to complete your statement and then 

we will be happy to hear Senator Blumenthal as well. Thank you. 

Mr. MASSAD. Let me just say thank you to Senator Blumenthal 

for appearing today and for supporting my nomination. I am very 

grateful. 

If confirmed, I look forward to addressing the many important 

issues facing the CFTC. First, I believe there is nothing more important than a robust enforcement program in order to protect the 

integrity of our financial markets. 

We must aggressively pursue wrongdoers, whatever their position or size, and we must deter and prevent unlawful practices. 

Strong enforcement is vital to maintaining the public’s confidence 

in our markets. Therefore, I will make it a top priority to fulfill the 

CFTC’s responsibility to enforce the laws protecting these markets 

vigorously. 

Second, the CFTC has promulgated almost all of the new rules 

required by Congress. Now the Commission must make sure that 

the rules work, that participants comply with the requirements and 

that the markets operate transparently and effectively. This is true 

not just for the swaps markets where the new rules have received 

great attention, but for the futures markets as well. 

As we implement important reforms, we must make sure the 

markets continue to serve their essential functions of providing 

hedging and price discovery for end-users. In this regard, I look forward to listening to the concerns of traditional end-users such as 

agricultural stakeholders, as well as participants in the markets 

newly subject to the CFTC’s jurisdiction. 

The Commission must also work closely with international regulators. The derivatives markets are global, and we must ultimately 

achieve strong international regulatory standards. 

The United States should be a strong leader in developing such 

standards, as it has been in regulating the securities markets since 

the 1930s. 

Third, the CFTC faces important technological and data challenges. The markets it regulates are, like all financial markets 

today, heavily dependent on technology. We must focus on the 

8 

issues this creates and make sure the Commission has the up-todate capabilities to do its job. 

In addition, the law requires the collection of vast amounts of 

data concerning the derivatives market. We must make sure this 

data is collected wisely and efficiently so that it can be used to 

monitor and mitigate excessive risk and bring much-needed transparency to these markets. 

There are many other areas where the Commission has important responsibilities, such as final action on a position limits rule 

for physical commodities, margin requirements for uncleared 

swaps, and ensuring adequate protection of customer funds. If I am 

confirmed, I pledge to work tirelessly to lead the CFTC in fulfilling 

its responsibilities. 

In conclusion, I consider public service the highest calling, and 

it would be an honor and a privilege to serve as the next Chairman 

of the CFTC. 

If confirmed, I look forward to working closely with the Members 

of this Committee and your colleagues as you conduct your important legislative and oversight role. 

Thank you for considering me for this important position and for 

the opportunity to appear before you today. I would be happy to answer any questions. 

[The prepared statement of Mr. Massad can be found on page XX 

in the appendix.] 

Chairwoman STABENOW. Thank you very much. 

Senator Blumenthal, we are happy to have you with us. 

STATEMENT OF HON. RICHARD BLUMENTHAL, A U.S. 

SENATOR FROM THE STATE OF CONNECTICUT 

Senator BLUMENTHAL. Thank you so much, Madam Chairwoman. 

I apologize for being a little bit late. As all of you are doing I am 

sure, I am trying to juggle multiple Committee commitments, and 

I am so appreciative for the opportunity to be with you today and 

a support Tim, who is a longtime friend, and I am going to refer 

to him as Tim if I may because I have known him for a couple of 

decades and to say that he is well qualified for this job is a supreme understatement. 

As you have heard about his background and I am not going to 

repeat it but I am very, very proud to be here today because he 

is a Connecticut resident, still has a home in Norwalk, Connecticut, 

has been a public servant not only at the global level as you heard 

but he has also been Vice Chairman of the Norwalk redevelopment 

agency and president of the Norwalk Community College Foundation among his many local and State involvements. 

So, he is someone who lives public service, and I think his assignment at this point, as everybody on this Committee knows, is 

absolutely critical to avoid the kind of excesses and abuses that he 

has helped the Nation to recover from. 

He has been in charge of unwinding the TARP program, first 

overseeing TARP’s hundreds of billions of dollars of investments 

and eventually reducing them and unwinding them, and he has 

played a key role in helping our economy and financial system recover from that precipice of disaster and I think President Obama 

said it best in thanking him for that job, and I am quoting, ‘‘I think 

9 

it is safe to say that he never wants to have to manage something 

like TARP again’’. 

He did it well; but in his new role, he will help the Nation avoid 

those kinds of laxity and laggardness in law enforcement that 

brought the Nation in part to the problems that it encountered. 

That is what I really welcome in his approach. He stated it well 

today, his focus on strong enforcement to keep the financial system 

safe and secure from unchecked risk as we work with our international partners. 

On their efforts at derivatives reform, the CFTC must also make 

sure to contain the rifts that we encounter here and that flow from 

offshore back to the U.S. economy, and that means a strong regulatory regime here and in the international sphere going forward. 

I think he will help to impose that standard, the high bar that we 

need on the international regime. 

So, he has a very challenging and important assignment ahead. 

I am very, very proud to support him here and hope that his nomination will move swiftly. 

I also want to thank the others who are with him today for their 

public service. This body, the CFTC, is not a household name as 

we all know but it has implications and impacts on all of the 

households throughout the country, on farmers, on Wall Street, on 

Main Street, across the United States. 

I want to thank you again, Chairwoman Stabenow and Ranking 

Member Cochran for the opportunity to be with you today. Thank 

you so much. 

Chairwoman STABENOW. Thank you very much. We appreciate 

your being here and your comments. 

We will now turn to Mr. Giancarlo. Welcome. 

TESTIMONY OF J. CHRISTOPHER GIANCARLO, OF NEW JERSEY, NOMINATED TO BE A COMMISSIONER OF THE COMMODITY FUTURES TRADING COMMISSION 

Mr. GIANCARLO. Thank you, Chairwoman Stabenow, Ranking 

Member Cochran, and members of the Committee, I am honored to 

be here before you today. I would like to thank Senate Minority 

Leader Mitch McConnell, for recommending me to the President 

and to President Barack Obama for nominating me for this position. 

With your permission, Madam Chairwoman, I would like to introduce members of my family who are here with me today. I am 

joined by my dear wife, Regina, and our three children, Emma, 

Luke, and Henry. I am also pleased to introduce my mother, Mrs. 

Ella Jane Keegan, and my father, Dr. Hector Giancarlo. 

Chairwoman STABENOW. Please stand. We would love to recognize you. Welcome. We are happy to have you at the Committee. 

[Applause.] 

Mr. GIANCARLO. Madam Chairwoman, I hail from a line of 

nurses and physicians and business owners. They were children of 

simple emigrants who came to America to work hard and raise 

their families. They raised and educated their families and served 

their local communities. They volunteered, fought and died for our 

country in time of war. They would beam with pride if they saw 

one of their own here today. 

10 

But I was the black sheep in the family by choosing law over 

medicine. I practiced law for 16 years in New York and London 

where I advised many early stage technology companies in bringing 

their products into U.S. 

In 2000, I joined a client firm that produced cutting-edge software that brought transparency to the pricing of currency options. 

I was then introduced to the global markets for swaps and derivatives. I have served over a decade as a senior executive of one of 

the primary intermediaries in the world’s wholesale financial markets. In 2005, I directed the firm initial public offering. 

In September 2008, Lehman Brothers filed for Chapter 11 bankruptcy protection. A typical ‘‘run on the bank’’ ensued with rapidly 

falling asset values that prevented lenders from meeting their cash 

obligations. This marked the beginning of a financial crisis that 

was devastating for far too many businesses and families. As you 

noted, 8 million jobs were lost here in America. 

Without question, counter party exposures related to bilaterally 

cleared over-the-counter swaps helped amplify and spread the financial crisis. Inadequate collateralize and little public information 

about exposures among swaps users caused third-parties to become 

less willing to provide credit. Fear of the stability of the U.S. banking system forced the federal government to place emergency capital in the largest U.S. banks and insurance companies at tremendous expense to U.S. taxpayers. 

While U.S. swaps markets continued to function during the financial crisis, trading liquidity dried up. I had been a proponent 

of central counter party clearing since before the financial crisis. 

During the Dodd-Frank Legislative debate, I publicly called for increased central counter party clearing, regulation of trading platforms, and increased regulatory and marketplace transparency. 

My support for these three reforms is based not on academic theory or political ideology. It is based simply on my practical experience in the markets. But I am also a strong believer that vibrant, 

open and competitive markets are essential to a strong economy. 

Proper regulatory oversight can go hand-in-hand with open and 

competitive markets. 

But if excessive regulation arbitrarily increases the cost of risk 

management to end-user, the overall economy will suffer. If confirmed, I will commit myself to ensuring the proper balance. 

In the almost four years since the passage of Dodd-Frank, the 

CFTC has outpaced its peer financial service regulators in the implementing rules, and I compliment the agency staff for their extraordinary work. 

But regulatory effectiveness must be a higher priority than 

speed. It is essential that we get the details right in implementing 

the core reforms of Title VII. If confirmed, I look forward to bringing my practical business experience and legal judgment to bear in 

completing the implementation of Dodd-Frank. 

While my professional work over the past decade has been focused on financial swaps, I am very conscious that the U.S. futures 

markets were initially created to hedge price exposure in agricultural commodities. It is essential that U.S. futures and swaps markets continue to serve the needs of farmers, ranchers, feed yards, 

grain elevator operators, energy producers, refiners, wholesalers 

11 

and, yes, manufacturers that are the backbone of our U.S. economy. If confirmed, I will commit myself to attending to concerns of 

end-users of swaps and futures. 

The goal of swaps market reform is to enhance the safety and 

soundness of hedging markets. The CFTC must fulfill its mission 

to implement the reforms of Dodd-Frank in a practical manner 

while continuing to oversee these critical risk hedging marketplaces. If confirmed, I will work faithfully with my fellow Commissioners to further that essential mission. 

On a final note, my nomination is to fill the seat vacated last 

year by Commissioner Jill Sommers, who served the CFTC with 

distinction and dedication. 

Thank you again for the honor of appearing before you. I will be 

pleased to answer your questions. 

[The prepared statement of Mr. Giancarlo can be found on page 

XX in the appendix.] 

Chairwoman STABENOW. Thank you very much. 

Ms. Bowen. 

TESTIMONY OF SHARON Y. BOWEN, OF NEW YORK, NOMINATED TO BE A COMMISSIONER OF THE COMMODITY FUTURES TRADING COMMISSION 

Ms. BOWEN. Chairwoman Stabenow, Ranking Member Cochran, 

and other distinguished members of the Committee, I am honored 

to have been nominated by President Obama to serve as Commissioner of the Commodity Futures Trading Commission. 

I want to thank the Committee members and staff for meeting 

with me and for making time for this nomination hearing. I also 

want to thank Senator Gillibrand from my home State of New 

York. 

I too would like to take this opportunity to introduce my family 

members who are here today. My sister Sheila Taylor. My sistersin-law Rita Bowen and Emily Morse Campbell. My niece and nephews Alessandra and Carrington Campbell. A good close family 

friend Neal Cross Castelly. I want to acknowledge and thank especially my incredibly supportive husband of twenty-seven years, 

Larry Morse. 

Chairwoman STABENOW. Wonderful. Let us ask them to stand as 

well. It is so wonderful to see all the family members. 

[Applause.] 

Ms. BOWEN. Although other members of my family could not be 

here, I want to thank them for their consistent love and support. 

Also for family members who are no longer with us, I want to acknowledge the support and inspiration they instilled in me to do 

my best and be my best whenever I could. 

As the youngest of five children growing up in the segregated, 

small town of St. Julien’s Creek, Virginia, I understand the importance of being the voice of the under-represented who have not had 

a chance to have a seat at the table, as I do today. 

My commitment to public service runs deep and is not only evidenced by my role as the Acting Chair of the Board of Directors 

for the Securities Investor Protection Corporation but also by my 

personal contributions and leadership on behalf of my community. 

12 

In order to serve your community, you must understand your community’s strengths and challenges. 

I have been involved in numerous pro bono, educational, diversity, and civic efforts that address critical issues related to the ethics and sustainability of the legal profession, as well as the needs 

of the residents and families of New York City. 

I currently serve as a member of the Emeritus Board of New 

York Lawyers for the Public Interest, the Boards of New York City 

Economic Development Corporation, Northwestern University Law 

School, and, until recently, the New York City-based nonprofit 

PENCIL through which my colleagues and I have partnered with 

middle schools in Harlem and the Bronx for over a decade. 

I have served in several professional leadership positions, including co-chair of the Global Diversity Committee of my law firm, 

Latham & Watkins. I am also co-founder and head of Latham’s 

Women’s Initiative. I want to thank my partners and colleagues at 

Latham, especially my assistant, Audrey Leff, who have been 

staunch supporters and friends during my twenty-five years at the 

firm. 

My interest in finance started early. After receiving a degree in 

Economics from the University of Virginia, I received an MBA and 

JD from Northwestern before moving to New York to begin my 

legal career. 

I have over three decades of experience as a securities lawyer focused on financial markets and regulations. I maintain a deep understanding of regulatory requirements and disclosure obligations, 

and I understand the importance of, and risks associated with, derivatives. 

A fair and efficient financial market not only helps investors but 

also has a positive impact on farmers, ranchers, manufacturers, 

and ultimately, consumers and job creation. 

As the Acting Chair of SIPC, I have significant experience with 

the issues and procedures of dealing with failed broker-dealers and 

futures commission merchants in the financial and derivatives 

markets. 

Early in my career, I worked on swaps and asset securitizations. 

I have advised companies and financial institutions in the purchase 

and sale of assets and distressed securities in the bankruptcy context. So, I understand what happens when our markets do not 

function as expected. 

These experiences make me uniquely positioned to effectively 

guide and help the CFTC as it finalizes its regulatory rulemaking 

of Dodd-Frank. 

The next phase of the CFTC’s mandate requires effective implementation of these rules, with the participation and coordination of 

regulatory bodies both inside and outside of the U.S. I believe my 

strong analytical skills and reputation for building and leading 

teams with diverse perspectives across the globe will bring a 

unique contribution to the CFTC. 

I firmly believe that the CFTC should cooperate and work in harmony with foreign regulators. At the same time, though, we must 

move forward in implementing the rules and mandate of DoddFrank. 

13 

I know that Congress, in directing the CFTC to establish an expanded regime for financial oversight, recognized that excessive 

risk-taking in the swaps market and what it did to contribute to 

the devastation that afflicted our economy in the wake of the financial crisis. 

If confirmed, I would bring to my role as Commissioner an understanding of the securities and futures markets laws and regulations, the importance of both markets to the economy, and the terrible cost to the public when those markets fail. 

Capital formation in the securities market is different from the 

management of risk and price volatility in the futures markets. 

Yet, each has its own nuances that impact consumers and endusers. 

I recognize that our physical commodity markets need to be protected from excessive speculation and manipulation, and we must 

acknowledge that esoteric and other creative financial products do 

not always benefit consumers. 

It would be an honor for me to bring my experience in finance 

and securities to my role as Commissioner of the CFTC, if confirmed. I have a record of bringing teams together to find solutions, 

and I believe that my substantive experience and ability to bring 

my own voice to the table would be of value to a historically independent government agency like the CFTC. 

My door is always open and I am really ready and willing to 

learn and to listen and bring the best of my experience to my role. 

I believe I have the knowledge and the integrity to foster open, 

competitive, and financially sound markets; and I look forward to 

working with you in making our financial system stronger, and one 

that benefits everyone. 

Thank you for your time and consideration. I also look forward 

to taking questions. 

[The prepared statement of Ms. Bowen can be found on page XX 

in the appendix.] 

Chairwoman STABENOW. Thank you very much. 

We will proceed with questions. We will do five-minute rounds, 

and then if we have time, if there is interest, we certainly can do 

a second round. I believe there is a vote at 11:20 today. So, we will 

proceed with that in mind. 

To each of you, I would like to start out taking about the physical 

markets. While the futures markets have evolved over the years 

and they are used by both hedgers and speculators, fundamentally 

these markets were designed for risk management and price discovery. 

The functions are very important to commercial end-users. You 

will hear that from every single member of our Committee and 

those in agriculture, energy, and the metals space. 

So, could each of you talk—we will start with Mr. Massad—about 

the importance of futures, options and swap markets to our endusers-agriculture, energy, metals industries, and how your experience, specifically the kind of work you have done, would relate to 

the CFTC, particularly in this regard. 

Mr. MASSAD. Certainly. Thank you, Chairwoman Stabenow for 

the question, and I think you have said it best. These markets are 

incredibly important to end-users and we must make sure that 

14 

they continue to function well so that end-users can hedge exposures and achieve price discovery. 

In the course of my career as a lawyer, I advised a wide range 

of businesses, for example, many of them touched on the agricultural sector just because the agricultural sector is so important to 

our economy and it touches on so many businesses. 

Those include, for example, a fertilizer company that hedged its 

exposure to price risk on natural gas which is an important component of fertilizers. 

A major lender to rural electric co-ops. Just about any business 

I dealt with I would say hedged forms of risk in these markets of 

one kind or another. 

So, it is extremely important and I intend as Chairman to make 

sure that we are listening to the concerns of stakeholders of all 

types, including the traditional ones in the agricultural markets 

where the CFTC’s jurisdiction really started as well as the other 

physical commodities. 

I look forward to working with you and your staff and the other 

members of this Committee and their staffs on making sure that 

we hear their concerns and that we address those concerns. 

Chairwoman STABENOW. Thank you very much. 

Mr. Giancarlo. 

Mr. GIANCARLO. Thank you, Madam Chairwoman. 

This Committee and this Commission started out with a focus on 

Ag interest in the physical markets. That is where the origins are; 

and through the development of other markets and increasing of 

the jurisdiction and responsibility of the CFTC, those interests now 

are less than 10 percent of its mission but they are still a very important component of that. 

End-user concerns, whether it be in physical markets or in cashsettled markets, there are a number of concerns of the end-users 

that deserve our attention carefully at the commission. 

There are concerns about inter affiliated swaps and Treasury 

functions for end-users, and we need to make sure we get that 

right. There is concern about margin on unclear to swaps and those 

concerns CFTC has a rule proposal and that has not yet been finalized. We need to make sure that is finalized in a way that suits 

the interests of end-users. 

Its concerns about position limits. As you know, a major per policy proposal is put forward. Thousands of pages have now been received, and it will be for the work of this Commission going forward to wade through those comments and make sure that we get 

that right. 

We do not want to create loopholes but we need to make sure 

that end-users have the right outcome on position limits so they 

can hedge real risks as they are meant to, whether that is in physically settled or cash-settled instruments. 

So end-users have a number of concerns. They will be the foremost on our list. 

On the agricultural side, that will be something that I will be 

keenly focused on to learn those issues, to get out into the field to 

meet with the constituents that have concerns about physically settled agricultural issues and be there to understand those issues. 

Chairwoman STABENOW. Thank you. 

15 

Ms. Bowen. 

Ms. BOWEN. Yes. I understand the importance of the integrity of 

the markets to the agriculture community, as well as end-users. I 

am also aware of the long-standing and important role of agriculture in the history of the CFTC. 

A critically important role of the CFTC, though, is to protect 

against excessive speculation and manipulation which has been a 

long-standing concern. 

Our markets need to work for farmers, ranchers, and end-users. 

So, our rules must be balanced and not create undue costs and burdens. 

As a consumer, I am also aware of the high impact of gas prices 

and food and electricity on our families and neighbors. We all pay 

when our markets do not work. I will bring the full enforcement 

powers of the CFTC to bear, frankly, to protect against this type 

of excessive speculation and manipulation of the market. 

I frankly look forward to working with all of the stakeholders 

and to hear their concerns and address their issues. 

Chairwoman STABENOW. Thank you very much. I have, obviously, many other questions. I am going to stop to give others the 

opportunity to hold to five minutes but I do want to come back to 

issues on position limits and cross-border issues. But at this point, 

I am going to turn to Senator Cochran. 

Senator COCHRAN. Madam Chair, thank you. 

Let me begin by asking each of the nominees what your impression has been of the role of the CFTC in managing abuses that 

have led to investor losses through trading contracts or in trying 

to deal with the situation such as the Ponzi scheme of recent years 

that involved Mississippi and a lot of other states too and investors, this so-called Stanford Ponzi scheme. 

What is your reaction about how the Commission can act to help 

safeguard communities and investors in dealing with situations 

like this? 

Mr. MASSAD. Ranking Member Cochran, thank you for the question, it is a very important issue that you have raised. 

The incidents involving MF Global and Peregrine are obviously 

very, very damaging to the participants with those firms as well as 

to confidence in these markets generally. 

The Commission must do all it can to prevent that type of thing. 

It is my understanding the Commission has taken some actions 

with respect to protection of customer funds that are designed to 

address this. I want to make sure, if I am confirmed, that we have 

done all that we can and I look forward to talking with the staff 

about this and also talking with you and your staff about actions 

we might take. 

It is also a question of resources. As you know, the Commission 

relies on self-regulatory agencies to do a lot of the reviews of FCMs 

and so forth. 

But the agency needs to make sure that it does all it can within 

its capabilities to minimize this. We must take strong enforcement 

action when we discover any type of improper behavior. 

I look forward to making this a priority. 

Senator COCHRAN. Thank you. 

Mr. GIANCARLO. Thank you, Senator. 

16 

Those two instances you mentioned were tremendously damaging 

to market places. It is true that many years later people that lost 

money in those have gotten most of their money back but that is 

not really a complete solution because the loss of that money during that period of time would have been devastating to their agriculture business or to their manufacturing business. 

But even more broadly as an operator of markets, I know how 

important market credibility is; and what suffered in those two 

events is the credibility of the market places. 

As the overseer of the marketplace, the CFTC that is unfortunately a black guy. We need to make sure that does not happen 

again. There has been a number of steps taken, as you may know, 

some very good steps taken by the agency but also by the NFA 

working together with CME at the direction of the agency, the 

Tack Committee, to have electronic confirmation of customer accounts is a very good step forward. 

But I think there are other things that can be done as well. I 

know there are some suggestions about changes in the bankruptcy 

code that can be looked at. 

Commissioner O’Malley has made, I think, a very good suggestion about a super lien. As you know, many of these FCMs now are 

part of much a larger financial institution, and yet in the lean in 

favor of the customers exists at the subsidiary level. 

His proposal is that maybe that lien needs to be moved to the 

top of the house so the entire financial institution will recognize 

the concerns of customers as a top priority for the entire institution. 

I think that it is a suggestion worth looking at. But I look forward to working on these and other ideas with your staff and others as we go forward. 

Senator COCHRAN. Thank you. 

Ms. BOWEN. Thank you. In my acting role as Acting Chair of 

SIPC, I am particularly mindful of the importance of consumer protection. I have seen first-hand the devastating effect on everyday 

people who did nothing, to have their funds being misused and 

transferred to other entities, essentially creating investment banks. 

I think what we should do and I think what Dodd-Frank gives 

us to do is the enforcement authority which has been enhanced to 

guard against this type of misbehavior and fraud. 

I understand that resources are critically important for us to 

have the proper oversight, and I agree with Mr. Giancarlo in the 

sense that the type of work that Commissioner O’Malley is doing 

with respect to technology is critically important. 

We need to have those resources to make sure that the reporting 

obligations are accurate and effective and useful, and I obviously 

look forward to working with you and the rest of the Committee 

members on this important issue, including in the bankruptcy context, as you know I have expertise in that and would be happy to 

participate in those discussions. 

Senator COCHRAN. Thank you. 

Chairwoman STABENOW. Thank you very much. 

Senator Klobuchar. 

Senator KLOBUCHAR. Thank you very much, Chairwoman, and a 

thank you to our nominees. 

17 

I am going to direct my questions to Mr. Massad and it is not 

under any disrespect for the other two nominees but only because 

there is a five minute limit. So, I will put my questions in writing. 

I also wanted to greet our Minnesotan here. Charlotte, Mr. 

Massad’s wife. I know this means you will bring some Midwestern 

sensibility to the board. We are excited about that. 

I guess I will start with that and just began following up on Senator Cochran’s questions. The MF Global and Peregrine abuses 

really hurt a lot of people in my State. In fact, one farmer unfortunately had invested through both of them, and we had a number 

of problems because of that. I would just reiterate the importance 

of doing everything you can to be aggressive with those kinds of 

practices. 

I have also been very involved in the speculation issue, serving 

as a hub for Delta, agreeing with their CEO and also for a number 

of people who were hurt very much when there is speculation in 

the market and urge you to be aggressive about that. 

I do have a question on position limits or hard caps on a range 

of commodities including energy products. I think commercial 

hedges are based on an actual physical product like corn or wheat 

are exempt from the position limits. 

However, many of the commercial practices used in agriculture 

are caught by the position limits. For example, farmers will place 

a hedge on the price of grain from a silo that is to be delivered to 

market in the future before the grain is delivered to the silo. This 

provides the farmer with a set price for the grain and budget certainty. 

My first question is: Are speculative financial hedges different, 

do you consider them different, Mr. Massad, than the types of 

hedges used in common commercial practices used in agriculture? 

Mr. MASSAD. Thank you for the question, Senator Klobuchar. 

You have raised a very important issue, and Congress obviously 

was very concerned about this issue also in directing the agency to 

look at the issue of excessive speculation in position limits, and the 

agency has re-proposed a rule on this. 

I think, as we consider that, if I am confirmed, I will clearly 

want to be thinking about making sure that commercial end-users 

can still properly engage in the activities they need to engage in, 

can engage in bona fide hedging at the same time that we address 

the risk of excessive speculation which can lead to manipulation. 

I look forward to working with the staff on that and am happy 

to work with you and your staff to make sure that we take action 

in this area that is clear, that works for end-users, that addresses 

the concerns that Congress had and that is sustainable. 

Senator KLOBUCHAR. Thank you. I think we just want to make 

sure that the rule will allow for normal practices of these types of 

businesses. 

I have some questions on commercial end-users and exemptions 

to the margin requirements. I think I will put those on the record 

and get to something that you and I discussed when we met, and 

that is the importance of the renewable fuel standard for many jobs 

in my State, Senator Donnelly’s State, Senator Hoeven’s State. 

In fact, we had 16 senators that met recently with the EPA Administrator about this issue and some proposals that came out of 

18 

the EPA. This industry generates $5 billion in economic output, 

sustains tens of thousands of jobs, and we are concerned about this 

rule that recently has been proposed. 

It is not really in your jurisdiction. But what is in your jurisdiction is speculation, and we are concerned with the renewable fuels 

standard’s RIN market which we talked about. It was volatile last 

year and there were questions raised about the impact of excessive 

speculation in the market that may have caused this volatility that 

led to this proposed rule. 

What role do you believe the CFTC can play to reduce volatility 

and enhance transparency which is what we really want in the 

RIN market? 

Mr. MASSAD. Thank you, Senator. 

It is a very important issue and an area for us to be looking at. 

We have the responsibility to address excessive speculation. We 

have the responsibility to prevent fraud and manipulation in this 

market and the RIN market is one that we should be actively looking at and making sure that it is functioning properly. 

So, if confirmed, I look forward to working with the staff on that 

and to getting your ideas on the specific things that we might want 

to consider to make sure this is. It is a complex market, it is a new 

market; but it is very important to a lot of producers, a lot of the 

agricultural sector of this country. So, we need to make sure it 

works effectively for people. 

Senator KLOBUCHAR. Thank you. Because I think it played an 

unfair role in what happened and what we see in this proposed 

rule. 

I would also mention that Chairwoman Stabenow has shown 

great leadership in this area and I again will put questions on the 

record of the other two nominees as well has some on the margin 

issue and some position limits issues which you and I also discussed earlier. 

Thank you very much. 

Chairwoman STABENOW. Thank you. Important issues. 

Senator Chambliss. 

Senator CHAMBLISS. Thank you very much, Madam Chair. 

Let me follow up on that. I do not think there are any of us who 

would disagree that manipulation of the markets is a violation of 

the current law and it is a very critical oversight responsibility that 

CFTC has and we are all familiar with cases where manipulation, 

individuals who have sought to manipulate the market have been 

dealt with in a severe matter by CFTC and we want that to continue. 

But by the same token, speculators are an asset to the market. 

I want to make sure as we go through this, and you are going to 

add any number of rules and regulations that you deal with regarding that issue; but if each of you will just give me a simple yes 

or no. I want to make sure that you have no bias against speculators. 

Mr. Massad, let us start with you. 

Mr. MASSAD. Certainly. Senator, I can assure you that speculators are important in these markets. That is often the other side 

of the hedge for a business that is seeking to hedge commercial 

risk. 

19 

Senator CHAMBLISS. Great. Mr. Giancarlo. 

Mr. GIANCARLO. The answer, I cannot remember how you rephrase it, yes or no; but I believe speculators play an important 

role in the market. 

I think actually the law does not bar speculation in the market. 

The law gives the CFTC power to use position limits to prevent excessive speculation. It does not bar speculation. 

Speculation allows hedgers to meet a cross time. They play a 

very important role in markets. As an operator of markets for 

many years, I understand that. 

Senator CHAMBLISS. Ms. Bowen. 

Ms. BOWEN. Yes, I do acknowledge that speculators are one player in the market. I absolutely do recognize that. At the same time, 

I do recognize that excessive speculation is a problem and it is 

critically important for us to protect our markets. I do not think 

we are going to have market integrity at all if we allow there to 

be excessive speculation. 

Senator CHAMBLISS. Obviously, you are here because this Committee has jurisdiction over the operation of the Commodity Futures Trading Commission. Within the Commission, there are various advisory committees. One of those is the Agricultural Advisory 

Committee. 

It is interesting to note that there has not been a meeting of the 

Ag Advisory Committee of the CFTC since 2011. With the confirmation of the three of you, there is not going to be anybody on 

the Commission that has what I think we could refer to as a background in agriculture which is a little bit unusual because that was 

the original nature of the CFTC. 

Do any of the three of you have any interest in chairing the Ag 

Advisory Committee within the CFTC? 

Mr. MASSAD. Well, Senator, perhaps I should speak first as the 

nominee for the Chair. It is, I think, vitally important to the Commission that we have the input of agricultural stakeholders. It is 

an incredibly important part of these markets, and I think the advisory committee is a great way of doing that. 

I will tell you I will make sure it is chaired. I am, I think we 

have to see exactly, if we are all confirmed, who does what. But I 

will pledge to you that we will make sure it is an important committee that meets regularly. 

Mr. GIANCARLO. Senator, I also agree that it is vitally important 

that committee be chaired. I think it is an unfortunate oversight 

that it has gone on so long. 

If I might add, I believe there is also another committee, and 

that is the Energy Committee, Advisory Committee, that also has 

not met for some time. 

So, to answer your question, I would be honored to chair either 

of those committees. 

Ms. BOWEN. I would like to say my door is going to be open for 

any stakeholder, whether we have committee meetings or not; and 

so I welcome to have the Agriculture Committee committed to come 

and visit. I do know our Chair will probably have something to say 

as to who gets which committees. But irrespective that, please look 

to me to be someone who would be very welcoming to them. 

Senator CHAMBLISS. Great. Thank you. 

20 

Mr. Massad, when Dodd-Frank passed, I was concerned that 

CFTC would go too far in regulating the activities of commodity 

end-users; and based on the comments of my constituents, I think 

my concerns are justified. 

Are you satisfied that the Commission has given due consideration to end-users in the exemptions and exceptions provided to 

them by Dodd-Frank and the CEA in its rulemaking? 

Mr. MASSAD. Well, Senator, if confirmed, I want to make, absolutely sure, that we have. I think that is part of Congress’s direction to us in providing the statutory basis to recognize that endusers, particularly non-financial commercial end-users, who are 

hedging commercial risk are treated differently than the financial 

entities that may be dealers or other participants in these markets. 

So, I look forward. I know there are a wide range of issues that 

touch on this, and I intend to make sure that we have taken all 

appropriate action to make sure they are treated properly and 

again look forward to working with you and your staff in hearing 

your concerns on that. 

Senator CHAMBLISS. My time is up, but, Mr. Giancarlo, you mentioned an issue that is very critical to all of us that are concerned 

with the markets and that is the issue of position limits. 

As you go through the discussion of this, should that take place, 

what really concerns me is that there is going to be an opportunity 

to create winners and losers and that should not be the object of 

at CFTC. 

So, as all three of you educate yourself on this issue and go 

through it, we look forward to dialoguing particularly on that issue 

of position limits. 

Thank you, Madam Chair. 

Chairwoman STABENOW. Thank you very much, I would just add 

my voice to Senator Chambliss about the Agriculture Advisory 

Committee and I hope you will seriously look to that as an important part of receiving critical input from agriculture. 

Senator Donnelly. 

Senator DONNELLY. Thank you, Madam Chair. 

Mr. Massad, I thought that this would be the moment when we 

were together in my office, I said if you do a great job as Chair you 

could be the Derek Jeter of the CFTC; and you said wait until my 

son hears that. 

[Laughter.] 

Senator DONNELLY. Your son was here and he just left to get a 

drink of water. So, the timing was terrible on this. 

Mr. MASSAD. I will make him watch the tape. 

Senator DONNELLY. All right. Very good. 

In regard to position limits, I have argued that they should be 

a tool in the CFTC’s toolbox that helps fulfill its mission to promote 

transparent open markets and to protect the public from fraud and 

manipulation. 

I just want to make sure that with all three of you that you will 

work to finalize a good position limits rule in a timely manner. 

Mr. MASSAD. Senator, I believe it is very important that we work 

to finalize that rule. We have had position limits in place for agricultural commodities, as you know, for many years. I think they 

21 

are a very important tool in the toolkit, and Congress obviously has 

directed us to take action in this regard. 

So, I will make that a priority. 

Senator DONNELLY. Mr. Giancarlo. 

Mr. GIANCARLO. Yes. Along with margin on uncleared swaps, I 

think that position limits is one of the outstanding rulemakings 

that are vitally important to the end-user community. 

As I said earlier, thousands of pages of comments have now been 

received. The comment period ended at the beginning of February. 

It will now fall to the Commission to go through those comments 

very carefully and make sure that end-users receive the exemption 

that they deserve and yet at the same time that loopholes are not 

created through it. 

So, we have got to get it right. 

Senator DONNELLY. Ms. Bowen. 

Ms. BOWEN. Yes. I would just briefly also echo that it is an important tool in the toolbox. At the same time, I do look forward to 

reading the comments. I know there are hundreds of comments on 

this issue, and I look forward to reading those and having discussions with constituents. 

Senator DONNELLY. Thank you. 

Mr. Massad, I think a good argument can be made that excessive 

speculation leads to increased or exaggerated price fluctuations 

that can negatively affect the pocketbook of Hoosiers. 

As part of the position limits imposed, I understand it creates a 

position limit five times higher for traders in cash-settled markets 

if they are not also trading a physically settled contract. 

Can you explain why these limits are needed and why I should 

not be worried that they might increase the potential for manipulation? 

Mr. MASSAD. Thank you, Senator, for the question. You have 

touched on a very important issue. What is called the conditional 

spot limit rule that is part of the reproposed rule. 

It is a very complex issue. I know there are strong views on both 

sides. I look forward to reading the comments on this issue and 

talking about it with the staff and would be happy to visit further 

with you on it. 

I think we have got to make sure that we end up with any final 

action we take that it is well reasoned, it is objective, it is justified, 

it is based on evidence, and it has a sound basis. 

So, I pledge to you that is what I will try to make sure we do 

and again I am happy to work with you on it. 

Senator DONNELLY. Thank you. 

As you have heard from my good friends and colleagues here, agricultural commodity markets are part of the heart and soul of 

what we do here. 

I just want to make sure that you all are committed to continuing the commitment to that, the emphasis to that and the desire to never forget what a critical part that is in this Committee 

or of the CFTC. Thank you. 

Mr. MASSAD. Yes, Senator. 

Senator DONNELLY. On position limits again. We talked about excessive speculation and there have been times in the past, it is extraordinary when all of a sudden you look up and the families in 

22 

Logansport, Indiana, and in Evansville, Indiana, are looking at 

$4.25 gasoline when it was a dollar cheaper maybe a few months 

before or whatever. 

I was wondering. We have seen the spot markets, 421 million 

barrels on spec or more. Do you think that numbers of that size 

affect pricing of the product? Mr. Massad, if you would. I only have 

about a minute left. 

Mr. MASSAD. Well, Senator, thank you for the question. I guess 

I would say that speculation obviously can affect prices. There are 

many, many factors that affect prices. Sometimes it is difficult to 

measure exactly what the impact is of any particular factor. 

But I think again Congress directed us to look at the issue of excessive speculation and take action. If I am confirmed, I will make 

it a priority that we do that. 

Senator DONNELLY. Thank you. 

Mr. Giancarlo. 

Mr. GIANCARLO. One of the accomplishments of Title VII of DoddFrank was to create a whole regime for the collection of market 

data in the swaps market, and the CFTC has gone far into beginning the process of collecting that data, but yet to be done is the 

process of really mining and interpreting that data, and that is a 

very important mission, I think, for this Commission going forward 

so we can look at just questions like that to determine what is the 

role in the cash-settled market, how does it affect the physically 

settled market. 

So, that is something that I think is going to be an important objective for this Commission to get the data, gathering the data and 

now being able to interpret it and come to some real conclusions 

about what is going on in the marketplace and what do we need 

to do about it. 

Senator DONNELLY. Ms. Bowen. 

Ms. BOWEN. I do think it is critically important for us to really 

spend a great deal of time frankly on this issue. A number of you 

have raised it today and we know how important that is to consumers. 

You have my commitment that I will definitely be addressing 

that issue as well with my colleagues. 

Senator DONNELLY. I want to thank all of you for putting yourself forward for public service. Your work, you know, in many ways 

for all of our families and I will wrap this up. Families have to 

make decisions on limited paycheck and limited pocketbook of 

whether sometimes when prices go so high, whether they can fill 

up the market basket or whether they have to fill up the gas tank. 

We are very, very grateful for your willingness to step up for all 

of our fellow citizens. 

Thank you. 

Chairwoman STABENOW. Thank you. 

Senator Hoeven, you are back just in time. You are up. 

Senator HOEVEN. Thank you, Madam Chairman, and again my 

thanks both to you and the Ranking Member for your leadership 

on the Farm Bill. I truly appreciate it. 

Thanks to the witnesses, Mr. Massad, thank you for coming to 

visit with me. I appreciate it as well as your background, the work 

that you did with TARP. 

23 

Mr. Giancarlo, good to have you here. Ms. Bowen, thank you so 

much. 

My first question is related to position limits. The CFTC, and I 

apologize if somebody else has already asked this question, but I 

think it is very important. 

The CFTC has recently proposed a position limits rule; and essentially for contracts where you take physical delivery to settle, 

you could have one position limit. But if you have cash-settled contracts, you could take five times that position limit. I think that is 

a concern. Furthermore, you have some of the markets that settle 

their cash contracts pricing off of the physical delivery markets. I 

think that raises issues of liquidity. I think that raises issues of 

price volatility. 

This rule was proposed before, rejected. I believe the former 

Chairman was very much opposed to it and now it is being re-proposed. 

I would like you to address that starting with Mr. Massad but 

I would like each of you to address this issue. 

Mr. MASSAD. Thank you, Senator Hoeven, for the question. You 

are referring to the conditional spot limit rule. 

Senator HOEVEN. Exactly. 

Mr. MASSAD. It is a very important issue and it is included in 

the reproposed rule, and I want to say that, if I am confirmed, I 

look forward to reading the comments about this issue. It is a complex one. I know there are strong views on both sides. 

It is very important that we take action which has a justifiable 

basis, a reasoned basis, is grounded in the data, and is sustainable. 

So, I am happy to work with you and talk with you further on 

this issue. Again, I know it is an issue that there are some strong 

feelings about, but we need to make sure we take a well reasoned 

action, and I can just pledge that I will use the best of my abilities 

to do that. 

Senator HOEVEN. Mr. Giancarlo. 

Mr. GIANCARLO. This is an important issue. It is an issue that 

I know there has been a lot of comments received in the comment 

period. I have not had a chance to see all of them and I would not 

want to prejudge it until I have had a chance to look at that. 

I would say that, it is conceived in the market that physically 

settled contracts have different dynamics than cash-settled contracts, and there may be different opportunities for manipulation, 

and one is different than the other. 

But one of the things I would really like to look at as I go 

through the comments is what data was the basis for the CFTC’s 

proposal on the five times exception to the rule. I would like to understand what data it was underlying it and is it current data, is 

it appropriate data. 

I am going to be very data-driven, if confirmed, in the role and 

I think that is going to have to drive a lot of the decision-making. 

Senator HOEVEN. Ms. Bowen. 

Ms. BOWEN. It has definitely been a topic very much so not just 

today but I understand it is an incredibly important topic. The fact 

that it was reproposed means that it really is critically important. 

I can tell you that I am going to bring a set of fresh eyes to this, 

look at it with a clean slate. I am not going to presume any posiVerDate Nov 24 2008 17:23 Feb 23, 2015 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\93026.TXT MICAH
24 

tion on this. I can assure you I will bring my objective best sense 

to look at the issues, and it is important for us to get it right. 

Senator HOEVEN. So, while I think you have tremendous qualifications, all three of you, I would say that I have some concern 

about, none of you have experience at the farming level at a grassroots level. 

You know, we do not have somebody with an Ag background, and 

I think that is important. I think other members have brought that 

up. 

But I am encouraged, I think Mr. Giancarlo, and maybe all three 

of you, express an interest in getting out and actually understanding how farmers and how agriculture uses futures contracts. 

I think we have lost track kind of where this came from. This 

was designed for farmers to hedge their risk when they grow a 

crop. They take a long position. They grow a crop, and it has 

turned into all of these financial futures and very complex instruments. 

Fortunately, I think you have a pretty good understanding of the 

complexity of those instruments, the risk they create at both an institutional and at a system level. 

But I do hope that you will take time. I think it is very important you get out and interact at maybe the farm level a little bit 

to get an understanding where is this all starts. 

You know, I would hope somebody on the CFTC would have that 

kind of Ag background. Now with the two we have and the three 

of you, we will not have that. 

So, that is one concern. The other is to look at this position limits 

rule because of the potential for price manipulation, speculation, 

price volatility. 

I am going to take you at your word. You are coming in with an 

open mind. That means that maybe a no when you get a chance 

to vote on this or maybe a yes. I have already asked the Chairman 

of this Committee to hold a hearing on this issue, and so I do want 

to emphasize to you that this is something we will be looking at 

very closely. 

I thank you for your service. 

Chairwoman STABENOW. Thank you very much. 

Senator Casey. 

Senator CASEY. Madam Chair, thank you very much and I appreciate you having us here for this hearing. 

I wanted to start off by saying to each of the nominees how much 

we appreciate your service, your willingness to serve at a tough 

time. We all here are elected officials. It is a tough time to be an 

elected official. It is also a tough time to be an appointed official. 

We are grateful you are willing to do that. 

As your families were introduced, I was reminded of my own 

background. My father was in and out of politics and government 

over the course of several decades, not years. 

Being at events where he was being sworn into office or being 

questioned about his work, I want to say to your spouses, your children and your family. 

We are grateful you are here and you should take great pride in 

this day and also take great pride in what your family members 

are doing because you are part of the reason they are here obviVerDate Nov 24 2008 17:23 Feb 23, 2015 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\93026.TXT MICAH
25 

ously, but you are also part of the service they will render to their 

country. We are especially grateful for that. 

I will do kind of an itemization of a couple of issues, some of 

which have already been addressed, but raise them for emphasis, 

I guess, and also to indicate how important they are to a lot of us. 

The end-user issue is a critically important issue for individuals 

and institutions. In Pennsylvania, we have, contrary to popular belief, we have a huge part of our economy that is an agricultural 

economy. 

There is always a debate about what is the biggest industry in 

the State, tourism or agriculture. It is probably not well known 

around the country how significant agriculture is in a state like 

ours which does have some major urban areas. 

So, the end-user issue is critical and I have not had a chance to 

talk to all of the nominees. 

Mr. Massad, we have spoken about this and I know my staff has. 

So, to the extent you can speak to that and take action in furtherance of the goals that we set forth on end-users I appreciate that. 

I want to ask a question about it. Senator Klobuchar raised these 

so-called RIN volatility issue, and I will not reiterate that. We will 

talk about that later. But that is critically important. 

I would be interested to see if there are ways that you could reduce the volatility in that market. That is something that we hear 

a lot about. 

I guess one very practical question I would ask, though, and I 

will start with Mr. Massad and others that want to chime in on 

this. The kind of fundamental question which are resources. I think 

sometimes we believe that if folks are focused on the right policy 

and they get through the confirmation process and they have an office to go to that everything is wonderful. 

We know that resources are critically important, maybe now 

more than ever, and I just want to give you an opportunity to 

speak to that in terms of what you see are the resource issues, if 

any. I hope there are none but I am afraid I am wrong about that. 

Mr. MASSAD. Thank you, Senator Casey. I appreciate the question. 

I think the resource issue is a very, very important one. I am 

very concerned about the adequacy of the resources obviously. This 

is an agency whose responsibilities have grown enormously and the 

budget has not grown. 

We must make sure that we provide adequate resources to the 

agency to carry out its mission. It is critically important, and I 

think it is also a very good investment for our country. 

We have the best financial markets in the world; and in part 

they are the best because they are well regulated, thoughtfully regulated, and it has been that way for decades. We should not lose 

that mantle and making sure the agency is adequately funded to 

meet all the challenges of this vastly expanded jurisdiction, of the 

technology that drives these markets, of the data collection responsibilities that we have, and of making sure we can take strong enforcement to address some of the other concern you highlighted is 

critical. 

I would be delighted to work with you and your staff on making 

sure that happens. 

26 

Senator CASEY. Anyone else want to comment on that issue? 

Mr. GIANCARLO. I would if I may. I am just conscious of the fact 

as we are here today Acting Commissioner Widgin is elsewhere in 

the capitol testifying on the CFTC’s budget, and I do not envy his 

task this morning. 

I entirely agree that the CFTC’s mission has been enormously 

expanded and its resources have not. Its mandate is the law so it 

has to meet that mandate and it has to have the right resources 

to do it. 

At the same time, I am informed by my own experience in business over the last 12 years but especially the last five years since 

the financial crisis. Revenues are down and yet demands on our resources are greater. 

We have had to do more with less in business just as probably 

most Americans in their own households had to do more with less. 

It is more time in the office, more time working to get more done. 

My own staff in my firm is down 10 percent and have not seen 

raises in six years, and I am not suggesting that you should be a 

policy but I am making the point that when we live in a time 

where resources need to be stretched because the American taxpayer’s pay the price at the end of the day. 

So, we have got to regulate these expanded markets yet we have 

got to be very, very careful that we are not spending the American 

taxpayer’s money improperly. 

So, I think resource allocation within the agency is important. 

Use of resources, cooperation with other SROs such as the NFA 

and others are vitally important. 

How do we use technology? In business, technology has become 

more important to do jobs and we need to find a way to do that 

within the agency as well. 

Cooperation with overseas regulators and litigating effectively, 

not taking on too many things by taking on the right things. So, 

I think those are things we need to do with in the agency. 

If confirmed, I would try to find the right balance. 

Senator CASEY. Thank you very much. 

Ms. Bowen. 

Ms. BOWEN. Just briefly. I would especially focus on our human 

capital and our knowledge base. With thirty-two years on Wall 

Street I can tell you there is no end to the imagination of the kinds 

of products that can be created. 

So, we frankly need resources to be able to police the market, to 

enforce the market, and frankly, to think ahead of the market. I 

would welcome the use of more resources to really develop our 

human capital as well. 

Senator CASEY. Well, that idea of you as part of an effort to be 

a cop on the beat is a very important point and we need to make 

sure what the research is. 

I am over time but I want to ask you to answer this question. 

You said you are the youngest of five? 

Ms. BOWEN. Yes. 

Senator CASEY. I grew up in a family of eight. My youngest 

brother is a great lawyer. He is number eight. He would say he is 

the smartest in the family. I am not going to ask you where you 

are but I am assuming you are. 

27 

Ms. BOWEN. Other than always being right. 

[Laughter.] 

Senator CASEY. For the purposes of confirmation, I will assert 

that you are the smartest in the family. 

Thank you for your service. 

Ms. BOWEN. Thank you so much. 

Chairwoman STABENOW. Thank you. Speaking on behalf of 

firstborns I would like to reiterate that—all right. 

Senator Thune. 

Senator THUNE. Thank you, Madam Chairman, and thank you to 

our nominees for being here today and welcome. 

Let me just, if I might, as we meet with these nominees this 

morning make very clear how important your job is. There are 

farmers and ranchers and grain elevators and cooperatives in the 

agricultural community that are increasingly dependent upon the 

tools that are available and that they utilize in terms of better 

managing their risk and especially in an era where you are starting to see lower commodity prices and higher production costs and 

these are all things that are under your jurisdiction. 

So, I just want you to know that the job that you have in front 

of you is an important one and there are an awful lot of people who 

depend upon the tools that are available. 

We all understand the importance as well of the need for transparency, for smart regulations that allow for effective cost analysis 

of proposed rules. I think it is really important that be an important component of everything that you do at the Commission. 

Just a couple of quick questions. I know the Chair is anxious, we 

have got to take some votes going here momentarily but I wanted 

to ask and I direct this to you, Mr. Massad. 

Since the passage of Dodd-Frank in 2010, the Commission has 

issued approximately 60 rules followed by more than 140 no-action 

letters. This reliance on no-action letters has created some confusion for the industries that the CFTC is regulating, and I am wondering what your thoughts are on the use of no-action letters and 

what, as Chairman, would you propose changing to decrease the 

CFTC’s reliance on no-action letters? 

Mr. MASSAD. Thank you for the question, Senator Thune. 

As someone who was in private law practice for many years, I 

think I appreciate very much the importance of good process and 

the importance of clarity in rulemaking. I also understand that 

there are appropriate circumstances where, instead of a rule, you 

may do guidance, you may do no action. 

Congress gave the Commission enormous responsibilities with 

deadlines to bring an entire market into regulation that really was 

not regulated. 

The Commission has promulgated almost all the rules required. 

It has also issued a number of no-action letters. 

What I would pledge to you is that I will use all of my best abilities to make sure that we act in a way that provides certainty, clarity, and sustainability. That we use rules where that is appropriate. That we have good adherence to the requirements of the 

Administrative Procedures Act so that people can comment on 

those rules. 

28 

There may be situations where guidance and no-action letters 

are appropriate such as when there are new facts in the market 

or things are still developing. 

But I think it is very important that we act in a manner that 

market participants can rely on what we are doing and have predictability. Having been a lawyer who advised a lot of businesses, 

I know predictability about the rules is very critical. 

Senator THUNE. Ms. Bowen, a lot of agricultural end-users are 

raising concerns about CFTC Rule Number 1.35 and the record 

keeping requirements associated with that. They find the rules so 

broad and vague that they believe they have to save every email 

or article that might lead to the execution of a transaction. 

I am wondering, as Commissioner, how you would provide more 

practical guidance to end-users with regard to that rule. 

Ms. BOWEN. Yes. I have read comments to that effect, and I do 

not think rules could be sort of one-size-fits-all. I think that is clear 

from the feedback that the Commission received. 

Particularly with end-users, we do not want to have rules that 

would create undue costs and burdens on them. So, I would pledge 

to make sure that we focus on that really, really clearly. I look forward to working with you and your staff. 

Senator THUNE. All right. Thank you. 

Mr. Giancarlo, tell me about why you would want to leave the 

private sector and pursue a position as a CFTC Commissioner. 

[Laughter.] 

Mr. GIANCARLO. Maybe I can tell a little story. In 1942, my 

grandfather was a physician in private practice in Hudson County, 

New Jersey, with a family of two and a busy urban practice. 

A few months after the bombing of Pearl Harbor, he marched 

down to the local recruiting office and enlisted in the U.S. Army. 

He, as a doctor, felt that he had something to bring. Even though 

he was 40 years old, he felt that he could serve as country following a crisis. He could bring his medical training. 

He then went on to serve at Fort Daniel, Georgia, and Fort 

Thomas, Kentucky. His family lived with my great-grandmother in 

Cincinnati during that service. 

He was the Army Commandant, Medical Commandant. He 

brought his medical skills to bear to solve a problem that had been 

a great problem in World War I with all the illness and death on 

American camps before the GIs even got to the front. 

In a similar way, I feel that I have learned a lot through the financial crisis. I was there in the center of it as an operator of marketplaces. I saw the devastation in markets and I realize that markets have to have, to operate efficiently and to serve our country, 

have to have credibility, have to have the reforms put in place but 

have to be put in place in the right manner. 

So, I think I am at a unique time. I think I have a unique set 

of skills, and I think I can bring them to bear and somehow follow 

in my grandfather’s footsteps. 

Senator THUNE. Thank you. My time has expired. Thank you, 

Madam Chair. 

Thank you all. 

Chairwoman STABENOW. Thank you. 

Senator Brown. 

29 

Senator BROWN. Thank you, Madam Chair. 

Mr. Giancarlo, my father was 35 at the time of Pearl Harbor, 

was a physician, and did not do exactly what your father did but 

mostly did that and was shipped off. He joined the Army because 

he did not want to be on a ship and he ended up the whole war 

on a ship. 

[Laughter.] 

Senator BROWN. He always rooted for Army or Navy in the 

Army-Navy game because, I do not understand any of that. But 

anyway, thank you for joining. 

I want to talk about end-users in a different way. During the last 

decade, Wall Street has expanded into a number of commercial activities. Power generation, what happened to electricity markets in 

California? 

You know about metals warehousing. The New York Times had 

a front page piece about what happened with aluminum in Detroit. 

Also in oil refining, oil tankers, even stockpiling yellowcake uranium. You know all of that. 

I have particular concerns about aluminum prices for the enduser as there are large breweries, large bottling companies, all soft 

drink makers, all of that. 

As you know, the CFTC can address this issue both through its 

anti-manipulation authority and its review of foreign boards of 

trade like the London metal exchange. 

As Commissioners, I have two questions. Then I think we need 

to go vote. One, do you think these institutions have moved too far 

into some of these commercial activities, Wall Street’s movement, 

especially two or three Wall Street firms moving into these commercial activities? This question is for all three of you as the second one is. 

As Commissioners, how would you use your anti-manipulation, 

your FBOT authority for the foreign boards of trade to address 

issues in aluminum and other metals. 

If you would just answer both of those questions, Mr. Massad. 

Mr. MASSAD. Thank you, Senator. 

As to the first question, let me just say that I think the issue of 

what businesses should large bank holding companies be allowed 

to be in particularly given the fact that they do receive various 

forms of assistance from the government in the form of deposit insurance, access to the discount window, and so forth is an extremely important one. 

It is largely outside the jurisdiction of the CFTC as you and I 

discussed when we met. Therefore, it is not something that as the 

CFTC Chair, if confirmed, that I would rule on. 

But as an American taxpayer, I think it is a very important 

question to be considered, and certainly to the extent that other 

regulatory agencies that are looking at these issues or the Senate 

or the House needs any assistance from the CFTC, I would be 

happy to provide it. 

As to the second part of the question, I think it is very important 

that the Commission use its authority, and if confirmed, I would 

certainly do so, to act if we see evidence of manipulation of any 

type but particularly in the markets as you have highlighted. 

30 

It is important that we act to prevent that. That is our job, and 

again I would be happy to work with you and your staff on making 

sure that we are looking at these issues. 

Senator BROWN. Mr. Giancarlo. 

Mr. GIANCARLO. You know, under Glass-Steagall, these institutions would not be able to engage in this. But I was not involved 

in the process by which those rules were winnowed down and eventually Glass-Steagall was repealed. 

Going forward, what I can say is market manipulation is market 

manipulation, whether it is done by large financial institutions or 

small financial institutions, whether it is done through the manipulations of delivery times in metal warehouses or whether it is done 

through any other means in markets. 

Any markets that are overseen by this agency, should I be confirmed, I would be supportive of aggressive action against market 

manipulation and using all the other tools including the other tools 

you mentioned which is the oversight, foreign boards of trade like 

the London metals exchange. 

Senator BROWN. Ms. Bowen. 

Ms. BOWEN. Yes, I too am aware of some of the situations you 

cited with respect to aluminum. I agree. That is something we 

should definitely be looking at particularly if that causes manipulation in the market. Any time you can control both the demand and 

supply of a commodity that could be a recipe or it needs to be 

looked at because it could be a recipe for manipulations. 

Senator BROWN. Mr. Giancarlo and Ms. Bowen, does it concern 

you that, I mean, Mr. Massad, answered the first part of that question. But does it concern you that Wall Street is in more of these 

real economy kinds of activities? 

Ms. Bowen. 

Ms. BOWEN. Wearing my personal hat, I am concerned and I am 

aware that the CFTC has sent letters to the LME and other exchanges to ask them to preserve their data, their price and 

warehousing rules. 

I believe the Fed has recently announced that they are taking a 

look at the issue of whether banks should be allowed to continue 

to operate in physical commodities. 

So, yes, I am concerned. 

Senator BROWN. Mr. Giancarlo. 

Mr. GIANCARLO. I do not think that good regulation would be in 

the business of picking winners and losers. So, I would not like to 

point at a particular industry. What I would say, as an operator 

markets, it has been my experience that whenever any parties in 

the market gain a dominant position, dominance can lead to 

abuses, and absolute dominance can lead to absolute abuses, as the 

saying about power goes. 

So, I think we need to be on the lookout for a dominant positions 

in any markets whether they be operated by Wall Street banks or 

whether they be operated by non-banking institutions or any others 

that were able to gain a dominant position in a market place. 

Senator BROWN. Thank you, Madam Chair. 

I would only say that this is not in their jurisdiction and not 

their purview but the issue of risk to a financial system by these 

large Wall Street firms getting and owning an oil tanker what disVerDate Nov 24 2008 17:23 Feb 23, 2015 Jkt 000000 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 C:\USERS\MW42035\DESKTOP\DOCS\93026.TXT MICAH
31 

aster could mean in terms of risk and stability for financial systems is a very serious issue. Again, not one probably in their purview or that they needed to speak of but importance. 

Thank you. 

Chairwoman STABENOW. Thank you very much. 

I know as a senior member of the Banking Committee that is 

something that you are deeply involved in as well. 

Votes have started and I have a long list of other questions but 

you will be saved from those at the moment. We will put them in 

writing. 

I do want to indicate again, you have heard over and over again 

about concerns about end-users. There have been multiple questions on position limits, issues that have been raised about market 

manipulation, excessive speculation and whether or not the CFTC’s 

proposal that includes higher limits on cash-held contracts plays 

into excessive speculation. 

So, there are a number of different concerns of the Committee. 

One thing we did not talk about I would just say that is very, very 

important is the issue of cross-border coordination, what the EU is 

doing. How we move forward on that. 

So, we have not had time to talk about it. I did intend to ask 

you about it. We have to work very closely together on this. As you 

know, this is incredibly important in making the system work in 

a global economy. 

Having a full Commission at the CFTC means more than just 

functional future swaps and options markets. It really is about a 

strong economy, having confidence in that economy in tools available for our job providers and to the millions of jobs that depend 

on the markets working. 

I would strongly urge that you reinvigorate the Agricultural Advisory Committee. I think that is going to be very, very important. 

I would also say to members that we need to have questions for 

the record submitted to the Committee as soon as possible so that 

the nominees can begin working on responses. 

The deadline for submitting questions for the record is no later 

than 2:00 p.m. on Monday, March 10. 

With that, thank you very much for your willingness to serve. 

The meeting is adjourned. 

[Whereupon, at 11:37 a.m., the Committee was adjourned.] 

(33) 

A P P E N D I X 

MARCH 6, 2014 

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(51) 

DOCUMENTS SUBMITTED FOR THE RECORD 

MARCH 6, 2014 

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(157) 

QUESTIONS AND ANSWERS 

MARCH 6, 2014 

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