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S. HRG. 112–284 

NOMINATION OF MARK P. WETJEN, 

OF NEVADA, TO BE A COMMISSIONER 

OF THE COMMODITY FUTURES TRADING 

COMMISSION 

HEARING 

BEFORE THE

COMMITTEE ON AGRICULTURE, 

NUTRITION AND FORESTRY 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

FIRST SESSION 

JULY 21, 2011 

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 

KENT CONRAD, North Dakota 

MAX BAUCUS, Montana 

E. BENJAMIN NELSON, Nebraska 

SHERROD BROWN, Ohio 

ROBERT P. CASEY, Jr., Pennsylvania 

AMY KLOBUCHAR, Minnesota 

MICHAEL BENNET, Colorado 

KIRSTEN GILLIBRAND, New York 

PAT ROBERTS, Kansas 

RICHARD G. LUGAR, Indiana 

THAD COCHRAN, Mississippi 

MITCH MCCONNELL, Kentucky 

SAXBY CHAMBLISS, Georgia 

MIKE JOHANNS, Nebraska 

JOHN BOOZMAN, Arkansas 

CHARLES E. GRASSLEY, Iowa 

JOHN THUNE, South Dakota 

JOHN HOEVEN, North Dakota 

CHRISTOPHER J. ADAMO, Majority Staff Director 

JONATHAN W. COPPESS, Majority Chief Counsel 

JESSICA L. WILLIAMS, Chief Clerk 

MICHAEL J. SEYFERT, Minority Staff Director 

ANNE C. HAZLETT, Minority Chief Counsel 

(II) 

(III) 

C O N T E N T S 

Page 

HEARING(S): 

Nomination of Mark P. Wetjen, of Nevada, to be a Commissioner of the 

Commodity Futures Trading Commission ......................................................... 1 

Thursday, July 21, 2011 

STATEMENTS PRESENTED BY SENATORS 

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

Roberts, Hon. Pat, U.S. Senator from the State of Kansas .................................. 3 

Introduction of Mark P. Wetjen, of Nevada, Nominated to be a Commissioner 

of the Commodity Futures Trading Commission, by Hon. Harry Reid, a 

U.S. Senator from the State of Nevada .............................................................. 2 

Witness 

Wetjen, Mark P., of Nevada, nominated to be a Commissioner of the Commodity Futures Trading Commission ................................................................. 5 

APPENDIX 

PREPARED STATEMENTS: 

Chambliss, Hon. Saxby .................................................................................... 22 

Wetjen, Mark P. ................................................................................................ 24 

DOCUMENT(S) SUBMITTED FOR THE RECORD: 

Landrieu, Hon. Mary L.: 

Written letter of support for Mark Wetjen, of Nevada to be a Commissioner of the Commodity Futures Trading Commission ............................ 30 

Written letter of support for Mark Wetjen, of Nevada to be a Commissioner 

of the Commodity Futures Trading Commission, U.S. Chamber of Commerce ..................................................................................................................... 31 

QUESTION AND ANSWER: 

Roberts, Hon. Pat: 

Written questions to Mark P. Wetjen ............................................................. 41 

Thune, Hon. John: 

Written questions to Mark P. Wetjen ............................................................. 34 

Grassley, Hon. Charles: 

Written questions to Mark P. Wetjen ............................................................. 37 

Nelson, Hon. E. Benjamin: 

Written questions to Mark P. Wetjen ............................................................. 38 

Wetjen, Mark P.: 

Written response to questions from Hon. John Thune .................................. 34 

Written response to questions from Hon. Charles Grassley ......................... 37 

Written response to questions from Hon. E. Benjamin Nelson .................... 38 

Written response to questions from Hon. Pat Roberts .................................. 41 

(1) 

NOMINATION OF MARK P. WETJEN, 

OF NEVADA, TO BE A COMMISSIONER 

OF THE COMMODITY FUTURES TRADING 

COMMISSION 

Thursday, July 21, 2011 

UNITED STATES SENATE, 

COMMITTEE ON AGRICULTURE, NUTRITION AND FORESTRY, 

Washington, DC 

The committee met, pursuant to notice, at 10:08 a.m., in Room 

G–50, Dirksen Senate Office Building, Hon. Debbie Stabenow, 

Chairwoman of the committee, presiding. 

Present or submitting a statement: Senators Stabenow, Nelson, 

Klobuchar, Roberts, Lugar, Boozman, and Thune. 

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

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

Chairwoman STABENOW. Well, good morning and thank you for 

being here today. The Senate Committee on Agriculture, Nutrition, 

and Forestry will come to order. 

Today, the committee will consider the nomination of Mark 

Wetjen to serve a five-term member, Commissioner, of the Commodity Futures Trading Commission. Mr. Wetjen, we are very glad 

to have you. Congratulations on your nomination. We extend a 

warm welcome to you and your family and friends that are here 

today, particularly your wife, Nicole, your son, Cullen, mother, 

Sheila, and brother, Sean. So welcome to all of you. We are very 

glad to have you here and I am sure you are very proud of Mark. 

I also want to take a moment to give a special welcome and 

thank you to Commissioner Mike Dunn, who is here with us today. 

Commissioner Dunn, we want to thank you for your service and 

your commitment to the agency and to the markets in the country. 

You have done very, very important work, and so we are very 

grateful. We appreciate your willingness to stay with the CFTC a 

little while longer as the Senate works through the nomination 

process, and again, we thank you for your service. 

In the same vein, I would like to thank Commissioner Jill 

Sommers for coming today. She is also doing very important work 

at the Commission, helping us to be able to get the rules right. In 

particular, I would like to highlight her strong work on international issues, which certainly has come up in our oversight hearings and is certainly a priority for me. So we want to thank you 

for all of your work. 

2 

I know that Senator Reid will be joining us shortly, and when 

he does, I will yield to him, but let me proceed at this point to indicate that Mr. Wetjen’s nomination comes at a crucial moment for 

our economy and our financial markets as the CFTC continues to 

both implement important regulatory reforms and monitor our 

commodity markets for manipulation, fraud, and abuse. 

The public’s awareness of the CFTC has only grown in the past 

year, with both the passage of the Dodd-Frank Act and the increased volatility in our commodity markets. People have realized 

just how much we need someone watching over these markets and 

the CFTC is there to protect both market participants and the integrity of the markets, making certain that they are competitive, 

open, and financially sound. 

I see that our Senate leader has joined us. Welcome, Senator 

Reid. I am going to stop at this moment and turn it over to you 

to introduce Mr. Wetjen. We appreciate always your leadership and 

hard work and your willingness to join us today. Senator Reid. 

INTRODUCTION OF MARK P. WETJEN, OF NEVADA, NOMINATED TO BE A COMMISSIONER OF THE COMMODITY FUTURES TRADING COMMISSION, BY HON. HARRY REID, U.S. 

SENATOR FROM THE STATE OF NEVADA 

Senator REID. Chairwoman, on the way over here, my staff said, 

here is something, that the speech has been prepared for you. I 

said, if I need a speech to introduce Mark Wetjen, I am in bad 

shape. 

I want to be able to convey to you how fortunate we are that people like Mark Wetjen decide they want to do public service. Mark 

Wetjen was an attorney in the largest law firm in Nevada. I received a call from one of my sons who said he knows a man by the 

name of Mark Wetjen who wants to come to Washington and work 

in the Federal Government. I said, well, what does he do with the 

law firm? I thought maybe he was a—I did not know what he was, 

but he was a lawyer doing extremely well, very productive, making 

good money. But Mark Wetjen has always wanted to be in some 

form of public service. He came back and has worked for me for 

five or six years. How long has it been, Mark? 

Mr. WETJEN. Almost seven. 

Senator REID. Almost seven. The reason his name was sent forward is not because I went out and hustled a job for Mark Wetjen. 

It came about as a result of everyone, Democrats and Republicans 

who work on Capitol Hill, realizing how good he is. He is an expert 

on housing and all kinds of financing. He is just a fine young man 

who will render as good of service to our country in his new capacity as he has working in the Senate. I think it is fair to say that 

he is one of the most popular staff members on Capitol Hill. He is 

always available, to Democrats and Republicans. And I am very, 

very fortunate that he has worked for me for these years. 

I care a great deal about Mark. He is one of those people that 

you deal with that you really feel like he is one of your sons. 

Chairwoman STABENOW. Thank you very much. 

Senator REID. I hope none of you are going to ask me any hard 

questions. 

[Laughter.] 

3 

Chairwoman STABENOW. We have some questions about credit 

default swaps we would like to ask you. 

Senator REID. Could I be excused? 

[Laughter.] 

Chairwoman STABENOW. Thank you very much, Leader Reid. We 

very much appreciate—we know you have much to do, but this is 

important for you to be here, so thank you very, very much. 

Let me just remind us that in 1974, Congress created the CFTC 

as an independent agency to regulate commodity futures and options, but over the years, that role has expanded to complex financial products, and most recently to swaps, overseeing most of a 

$300 trillion notional domestic market. While the CFTC is an agency that few Americans really think about, it is an agency that is 

so important to the daily lives of Americans. Whether it is paying 

for gas at the pump or paying for food to feed our families, when 

these markets do not work, consumers feel the pain. The CFTC’s 

role in overseeing our financial markets has significant implications for businesses around the world, as well, and the ability for 

companies to grow and create jobs. 

Commissioners play an important role in protecting these markets, writing regulations, investigating market abuses. Stepping 

into the agency in the middle of a complicated rulemaking is a 

heavy responsibility. As I told the White House, I expect a smart, 

thoughtful, independent voice at the Commission in this position, 

and I believe Mr. Wetjen will be such a voice. 

I would like to submit letters of recommendation for Mr. Wetjen 

from the U.S. Chamber of Commerce, and Senator Mary Landrieu 

has sent one, as well. If there are no objections, these letters will 

be inserted into the record. 

[The following information can be found on pages 30 and 31 in 

the appendix.] 

Chairwoman STABENOW. Seeing none, I now turn this over to my 

good friend, Senator Roberts, for his opening remarks. 

STATEMENT OF HON. PAT ROBERTS, U.S. SENATOR FROM THE 

STATE OF KANSAS 

Senator ROBERTS. Thank you, Madam Chairwoman, and I appreciate your calling this hearing today as we review the nomination 

of Mr. Mark Wetjen, and I welcomed the appearance of the Majority Leader to the sometimes powerful Senate Agriculture Committee. I had hoped he would stay around so we could talk to him 

about our budget responsibilities and specific numbers, but perhaps 

we can do that at a later time. 

Commissioner Dunn, let me associate myself with the remarks of 

the Chairwoman in regards to your service on the Commission. 

You, sir, have been an independent voice and I appreciate that very 

much. And to Commissioner Sommers, the same in regards to what 

the Chairwoman has indicated. In my view, you have been a voice 

of reason and I am looking forward to your continued service. 

I met with Mr. Wetjen. He obviously is a very bright and capable 

young man. I had sort of hoped that—Cullen started to try and testify. It was obviously—I do not know if it was by the committee’s 

recommendation or whether it was his parents, but I could hear 

4 

him in the background indicating his support for your nomination 

and offering several recommendations. 

At any rate, being very bright and capable, however, Mr. Wetjen, 

when confirmed, will have a very difficult job ahead of him. One 

year ago today, the President signed the Dodd-Frank Act into law. 

Mr. Wetjen was intricately involved in that in terms of the process, 

and it involves a labyrinth of new requirements impacting not just 

Wall Street and Main Street, but every rural route throughout the 

countryside. 

This committee has held two hearings on the general implementation of this new law. I hope we will have more. We have heard 

from folks up and down the industry chain, from end users to dealers to clearinghouses to self- regulating entities, all with varying 

degrees of concern about how the CFTC plans to regulate futures 

and swaps. 

I and many of my colleagues have expressed some concern over 

the CFTC’s proposals and I point out that that effort has been bipartisan. For instance, I understand in May, members of the New 

York delegation, of which this committee is very fortunate to have 

Senator Gillibrand as a member, sent a letter to the CFTC, FDIC, 

the Fed, and the Office of Comptroller of the Currency on the issue 

of CFTC’s attempt to regulate trades occurring overseas between 

non-U.S. participants. Now, I share their concern, but tell Mr. 

Wetjen that if you want an Honorary Marshal of Dodge City to sign 

a similar letter next time, just let me know. 

I did not vote for Dodd-Frank for several reasons, but one central 

concern was that the rules outlined in the legislation would have 

the effect of driving business overseas. I am very worried about 

that, moving liquidity from the United States to our competitors. 

The New Yorkers’ letter expressed this concern, but we have also 

heard from our competitors themselves. I included a letter from 

Japan into the record at our last hearing. Following up on that 

theme, recently, a Deutsche Bank executive was quoted as describing CFTC’s proposals as a terrific opportunity for European countries at the expense of the United States. Let me repeat that, a terrific opportunity for European countries at the expense of our country. 

I mention this today to highlight the importance for the job for 

which Mr. Wetjen is nominated. I sincerely hope it was not the intent of Dodd-Frank and those who wrote the law to create a mass 

exodus of capital from the United States. I know that was not the 

intent when they wrote it. But the law of unintended effects seems 

to carry the day around here when we pass such far-reaching legislation. That is why we need Commissioners who will adhere to the 

law, act in accordance with Congressional intent, and be an independent voice. 

Thorough cost-benefit analysis must be completed on these proposals so the Commissioners, Congress, and the public have a full 

understanding of their consequences. By the time Mr. Wetjen may 

arrive at the CFTC, there will probably be more than 40—40—final 

rules to consider, many of them the most complex and controversial. The Chairman, Chairman Gensler, has indicated that he plans 

to hold meetings to finalize these rules every few weeks for the remainder of the year. That is a tough schedule. 

5 

Now, this is not intended as a criticism of you, Mr. Wetjen, by 

any means, but I wonder, and we talked about it when you took 

the courtesy to come by and visit with me, how can anyone be expected to absorb the huge amount—thousands and thousands of 

pages of information—that has been collected on each one of these 

rules without having the benefit of meeting with affected parties 

and being involved in the entire process? So I am going to be interested in hearing how the nominee plans to climb this mountain of 

information before he is asked to vote on a rule. I am sure he can 

respond very well. 

Again, thank you, Madam Chairwoman, for calling this hearing, 

and thank you to Majority Leader Reid for joining us today. And 

again, I thank Mr. Wetjen and his very lovely family for being in 

attendance. 

Chairwoman STABENOW. Thank you very much. 

And now I have two things that I need to do, Mr. Wetjen. First 

is to administer an oath that we have for all nominees. I would ask 

you to stand and raise your right hand. 

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

present is the truth, the whole truth, and nothing but the truth, 

so help you God? 

Mr. WETJEN. I do. 

Chairwoman STABENOW. Thank you very much. 

And secondly, Mr. Wetjen, do you agree that, if confirmed, you 

will appear before any duly constituted committee of Congress if 

asked to appear? 

Mr. WETJEN. I will. 

Chairwoman STABENOW. Great. Thank you very much. 

At this point, I would like you to proceed with your testimony, 

and welcome again. 

TESTIMONY OF MARK P. WETJEN, OF NEVADA, NOMINATED TO 

BE A COMMISSIONER OF THE COMMODITY FUTURES TRADING COMMISSION 

Mr. WETJEN. Thank you, Chairwoman. Chairwoman Stabenow, 

Ranking Member Roberts, and members of the committee, thank 

you for the opportunity to be here today. I am honored to be President Obama’s nominee to be a Commissioner on the Commodity 

Futures Trading Commission. 

I want to thank Senator Reid for his support for my nomination. 

I also want to thank him for the opportunity to work for him and 

serve our country here in the Senate. I will always admire his decency, his honor, and his devotion to public service. 

I want to thank my family, especially my wife, Nicole. I am 

grateful to her for supporting my pursuit of public 

service in Washington, DC, and agreeing to move our family here 

almost seven years ago. 

I want to recognize our little boy, Cullen Michael, as well as my 

mother, Sheila, and brother, Sean, who are here with us today. My 

mother was able to travel here from my home town of Dubuque, 

Iowa. 

I would also like to thank Commissioner Mike Dunn, who shares 

Iowa roots and whom I would replace, if confirmed. And I also 

want to thank Commissioner Sommers for being here today. I comVerDate Nov 24 2008 01:30 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 C:\DOCS\71633.TXT MICHA
6 

mend Commissioner Dunn for his many years of service to our 

country. 

Growing up, I gained an early appreciation for agriculture while 

spending countless days and weekends on the Wetjen family farm 

near Williamsburg, Iowa. Much of the time was spent helping my 

grandfather as he did daily chores, and it was there in my grandmother’s kitchen where we listened to the morning market report 

on WMT Radio, hearing the latest prices for the corn, soybeans, 

and hogs my family produced. I also learned from my family there 

the values of hard work, listening to and respecting different points 

of view, and serving others, which I tried to bring to all of my pursuits, including my position with Senator Reid. 

During my tenure working for the Senate, our nation and the 

Congress have encountered multiple challenges that at times demanded policy responses. Many of these related specifically to financial markets, an area where I have advised Senator Reid for 

nearly seven years. From the housing crisis to the financial crisis, 

the problems and the policy responses were equally complex. 

By helping Senator Reid and the Congress work through a range 

of these challenges, I was asked to perform multiple tasks, but not 

the least of which was to work toward consensus, either within the 

Democratic Caucus, with the Republican Conference, or in many 

cases both. Indeed, this goal of achieving consensus has always 

been central to my responsibilities as a Senate staffer. 

I believe the experience of having worked for the Congress these 

last few years while we faced a sequence of extraordinary economic 

challenges and my role of helping craft solutions through consensus 

should prove useful if I am given the privilege to serve as a Commissioner at the CFTC. The Commission is now at an important 

period of history as it implements reforms to the swaps and futures 

markets, which for decades have served as useful tools for managing risk. The Commission is also in a key moment in the DoddFrank rulemaking process, having just begun finalizing some of its 

rules. 

With respect to swaps, the goals of Dodd-Frank are to mitigate 

systemic risk in the financial system, increase transparency in the 

derivatives markets, and combat fraud and manipulation in the derivatives markets. I believe these goals are nearly universally 

shared by market participants and policy makers alike and that 

building the new framework for regulating derivatives should be 

both nonpartisan and consensus-driven. 

Crafting rules that properly achieve these goals is, indeed, more 

challenging. The final rules will have an impact not only on ag producers in the heartland, but all market participants and the economy as a whole. Consequently, it is critical that the Commission 

continues its work in a careful, measured, and thoughtful way, and 

that the CFTC works to get these rules right. 

Likewise, it is critical that the Commission hews closely to the 

intent of Congress when finalizing its rules. That means, for instance, that the final rule should avoid imposing unnecessary cost 

burdens on commercial firms that use swaps. It also means that 

the final rule should seek to minimize unintended consequences 

that could impair U.S. competitiveness or the liquidity of our markets. 

7 

If, with your support and the support of your Senate colleagues, 

I am given the opportunity to serve on the Commission, I pledge 

to bring to the job an independent and open mind and a balanced 

approach to the rulemaking process and to the work of the Commission. 

In closing, I would like to thank the committee for holding this 

hearing. I am happy to answer questions. 

[The prepared statement of Mr. Wetjen can be found on page 24 

in the appendix.] 

Chairwoman STABENOW. Thank you very much. 

Mr. Wetjen, as you discussed in your testimony, when Congress 

passed the Dodd-Frank Act, we gave the regulators a lot of new, 

powerful authority, but we also put in place guidance in the statute, restrictions around those authorities, as well, to try to create 

a balance. We directed regulators to target system risk, as you 

talked about, and not inadvertently pull in commercial end users 

who are using derivatives to legitimately hedge and manage their 

risk, and we did that, in part, through a commercial end user clearing exemption and protections for captive financing affiliates as 

well as protections for smaller institutions as well as—such as community banks, Farm Credit, and Farmer and Rural Electric CoOps. 

So as a Commissioner, how would you respond to Congressional 

concerns and inquiries and how do you interpret Congressional intent when it comes to the application of margin on end user transactions or capital finance affiliates when it comes to the definition 

of a swap dealer? 

Mr. WETJEN. Thank you, Madam Chairwoman, for that question. 

This issue is one where I think it is quite clear in the statute, Congress did not intend to include captive finance companies or commercial firms in the vast majority of the regulatory regime authorized under Title VII. The goal has to be kept in mind, that the purpose of Dodd-Frank is to mitigate systemic risk, as you said, but 

that can be done in a way without placing unnecessary burdens on 

end users, commercial end users and captive finance companies. 

And so I think the statute is quite clear in that, and that includes with respect to when the—well, when the Commission is developing its rule on margin, it needs to acknowledge that intent 

and I have every intention of, if given the honor to serve, of working with the Commission, listening to all market participants in 

approaching this problem, but staying as true to Congressional intent as I can. 

Chairwoman STABENOW. Thank you. That is something that I 

know you are aware is of interest and concern on a bipartisan 

basis, both in the House and the Senate, addressing what we need 

to do in terms of systemic risk and following through on DoddFrank, but also balancing what are legitimate uses of the markets 

in terms of hedging risk, managing risk, and the importance of that 

to those who use the markets for its intended purposes. So that is 

something that we will continue to be in dialogue with the CFTC 

about. 

I wonder if you might talk a little bit more from the perspective 

of being an independent voice. That is something that you and I 

talked about when we met. As a new Commissioner coming in in 

8 

the middle, really, of intense rulemaking debates and rulemaking 

period, how would you balance your duties to both review and consider and in some cases even ask for changes to new rules before 

they become final without unnecessarily slowing down the process, 

because you are coming in at really a unique time. 

Mr. WETJEN. Thank you, Madam Chairwoman, for that question. 

I have given this question a lot of thought, and the best approach 

to maintain independence is, I believe, the approach I have tried 

to take working here in the Senate, and that is listen to all viewpoints. Do not come at a problem with a predetermined decision or 

outcome. Learn first. Listen to all viewpoints. Gather the information. That includes engaging with fellow Commissioners. That includes engaging with, as I said, market participants who are going 

to be impacted by these rules. That means continuing a dialogue 

with Congress. And I think by following that process and coming 

to a good, well-informed, reasoned decision, I am going to be able 

to maintain the independence that I think this committee expects. 

Chairwoman STABENOW. Thank you. 

I will turn now to Senator Roberts. 

Senator ROBERTS. Mark, some of my questions are going to be 

duplicative, but I think they are important because I think it underscores what a lot of people are concerned about, not about you 

particularly, but about the job. I appreciate your just emphasizing 

learning first, listening to stakeholders, listening to the Commissioners, doing the best job you can to become independent, but you 

are going to be voting on final rules, about 40 of them. The Chairman has a fast-track schedule. And the other Commissioners have 

had months to listen to stakeholders. You have heard me talk 

about this before, in my earlier comments. So you have been 

parachuted in. I recognize that you are young, bright, and very capable, but right in the middle of voting without having the opportunity to collect this information before you, unless you have been 

spending the wee hours of the night not with Cullen, but with 

studying all this information. 

How are you going to make an informed decision, and is it appropriate—and I am not asking you to do so, but would it be appropriate for you to recuse yourself for a brief period of time to get 

up to speed? Is that necessary, or do you feel like you can hit the 

ground running with all of these attributes that you have mentioned? 

Mr. WETJEN. Thank you, Senator Roberts. I have been monitoring the work of the Commission for quite some time now, but 

I think the more important point I would like to make, Senator, is 

that the process I laid out in response to Chairwoman Stabenow’s 

question is the process that I am always going to stick to, so that 

is making sure I have the requisite information to come to a wellreasoned decision. I am going to insist on taking whatever time I 

need in order to do that. So I am going to want to listen to all viewpoints. I am going to want to listen to each person who wants to 

bring information to me who might be impacted by any given rule. 

And I am going to follow that process. 

My focus will be on getting the rule right. I think the more 

quickly the Commission can act, the better, because it is going to 

provide some certainty to market participants and I know the marVerDate Nov 24 2008 01:30 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 C:\DOCS\71633.TXT MICHA
9 

ket prefers that or would like that. But I think more important to 

them is making sure the rules are right. And so that would be my 

primary goal. 

Senator ROBERTS. I appreciate that. The Chairman seems to 

think the United States should set its regulatory policy as tight as 

possible and our foreign counterparts will simply follow our lead. 

But as I have indicated in conversation with you before, Japan and 

the EU have delivered a very different message. The chief Japanese financial regulator has said that because of the 

extraterritorial reach of proposed U.S. regulations, Japanese institutions might have to avoid trading with U.S. institutions. That is 

a pretty strong statement, to say the least. 

Are you concerned that what I would describe as regulatory arbitrage could develop and participants may take their business overseas if our rules are too prescriptive? 

Mr. WETJEN. Senator Roberts, I think this is a very legitimate 

concern, and I know it is one shared by a number of folks here in 

Congress. The goal of Dodd-Frank is to protect the U.S. financial 

system. It is not to disadvantage U.S. firms that are operating 

overseas. The Commission needs to recognize, as the Congress did, 

that there is quite a bit of interconnectivity among global markets, 

and we saw that firsthand from the crisis of 2008. But notwithstanding that, I think this rule on margin will come out in the 

right place if the Commission remains mindful that, again, the goal 

is to protect the U.S. financial system and not disadvantage U.S. 

firms, and I think both of those objectives can be met. 

Senator ROBERTS. You are replacing Commissioner Dunn. I 

would not say replacing is the right word. He is obviously irreplaceable. But when the position limits rule was proposed, the Commissioner, in his usual independent voice, expressed his concern, 

quote, ‘‘at best, position limits are a cure for a disease that does 

not exist, or at worst, a placebo for one that does.’’ I am also concerned that there is no reliable analysis proving that position limits 

to curb excessive speculation in the swaps market would have any 

favorable impact on commodity prices. 

So do you believe it is important to have sufficient data about the 

swaps market and reliable economic analysis before adopting any 

position limits proposal? Obviously, the answer is yes, but go 

ahead. 

[Laughter.] 

Mr. WETJEN. Thank you, Senator Roberts. Congress through 

Dodd-Frank did give this tool to the agency to try and combat manipulation, and that is the tool of being able to impose position limits, as appropriate. In doing that, or in the agency’s effort to craft 

this rule, it needs to be very, very mindful of the impact on liquidity in these derivatives markets. These markets will not function 

well as a tool for commercial firms if liquidity dries up. So if I were 

given the honor to serve, I would want to consider market data. 

Again, I go back to some of my earlier responses. I want to make 

sure that every decision I make is as well informed a decision that 

I can make, and that includes considering all the requisite data. 

Senator ROBERTS. Madam Chairwoman, my time has expired. I 

do have about four or five more questions for the witnesses, but I 

yield at this time. 

10 

Chairwoman STABENOW. Thank you very much. 

Senator Nelson. 

Senator NELSON. Thank you, Chairman Stabenow, and thank 

you, Mr. Wetjen, for serving, and thank you to your family for supporting you in this service. As Creighton alums, I know you will 

bring a great deal of wonderful education to this position. 

Given your background, having grown up around agriculture, I 

know you can appreciate the impact that volatility of the market 

has on farmers. Their reliance on inputs such as fuel, fertilizer, 

and the income their earn off the grains are really contingent on 

the price of the market. This spring reminded us of the volatility 

in the marketplace, and I think we all agree on the necessity of implementing Dodd-Frank, and as you have said, in a sound and reasonable time frame and in a sound and reasonable way to deal with 

reckless speculation. 

But many of my State’s producers who are not really financial 

end users are concerned that, somehow, a one-size- fits-all approach will be put in place and will put regulations on market participants hedging for legitimate purposes, tying up capital from 

productive uses that would otherwise be available. Now, DoddFrank contained critical protections to ensure that non-financial 

end users who use futures contracts in a legitimate manner to 

hedge against higher prices would not be hampered by unnecessary 

regulations. 

So specifically when it comes to CFTC’s implementation of rules 

relating to the definition of a swap dealer, the end user, and exception limits, what are your thoughts when it comes to CFTC following Congressional intent when it comes to protecting commercial end users so they are not adversely impacted by Dodd-Frank’s 

regulatory framework? How are you going to protect against what 

I call the regulatory structure that seems to be, ‘‘and while we are 

at it, let us do this, too,’’ exceeding the direction of Congress by legislation but a well intentioned effort to, let us get that taken care 

of, as well, rather than just focusing strictly on what Congress has 

directed? What are your thoughts about that? 

Mr. WETJEN. Thank you, Senator Nelson. I think you raise a 

very important point, and as I said earlier in my statement, I think 

there are few things more important to a Commissioner than to follow closely, as closely as possible, Congressional intent. I think if 

I were given the privilege to serve, one area that I might like to 

look at would be to see, or to make sure any proposal or proposed 

final rule is very closely linked to specific authority in the statute. 

There might be times when you might not find the specificity 

that you need in order to solve a particular problem, but I think, 

generally speaking, you want to make sure that the authority is express, and so that is the approach I would intend to take. 

Senator NELSON. Well, I have always looked at a developing bureaucracy from the standpoint of having been a Governor dealing 

with bureaucracy and dealing with bureaucracy back here, describing bureaucracy as ‘‘we-be’’s. We be here when you come. We be 

here when you go. And I hope that you will be able to corral that 

particular approach in your position, if confirmed, and I believe you 

will be. 

11 

I guess I am speaking to the other Commissioners here in the 

room, as well, and those who are not in the room, to understand 

that Congressional intent, in my mind, is something short of sacred, but it is extremely important and I hope that that can be remembered, because while there has been a significant delegation of 

responsibility to alphabet agencies within this community, what 

flows from that delegation has to be totally consistent with what 

was intended by Congress in passing the legislation. It was not the 

beginning, and now it is up to the alphabet agencies to take it and 

run with it. It is to implement it consistent, and I appreciate your 

answer and I hope that you can hold firm to that with a lot of pressures to be, perhaps, extra- territorial in the approach, because we 

have seen an awful lot of that in Washington, and I hope you can 

hold back that process and participate in that manner. 

Thank you, Madam Chair. 

Chairwoman STABENOW. Thank you very much. 

Senator LUGAR. 

Senator LUGAR. Thank you, Madam Chairman. 

Mr. Wetjen, although the Commission was founded in 1974, not 

much had happened by the time I got into the Senate in the 1976 

election. Herman Talmadge, who was then the Chairman of the 

committee, was not deeply interested in CFTC. Senator Leahy and 

I were sitting at the end of a long table in the Ag room about 300 

yards from the Chairman, and as a result, were assigned oversight, 

and no one else really paid any attention. So we have sort of grown 

with the process over the years. Most recently, Walt Lukken, who 

was one of my valued staff members, headed the Commission, and 

I appreciated from his standpoint the difficulties that were faced. 

So a part of my questioning today really comes with regard to 

the success of the Commission. The debates in the press as well as 

with Gary Gensler and others have been over the fact that inadequate staff has been available for some time, just simply to go 

through the enforcement of what was on the books, quite apart 

from the interpretation of Dodd-Frank and recently, in the Wall 

Street Journal— yesterday, for example—the dispute over a 15 percent cut in the budget on top of that. While in our hearings on this, 

we are hearing about the prodigious effort to understand the rules, 

to get the rules going, and this does not offer a great deal of confidence to the American people who are outside of this, either as 

commercial users or as other persons, for fear that something may 

be occurring even while we are still writing the rules and with inadequate staff even looking at what we have. 

Do you have any observations of this, as you have looked at it 

from your current position as a valued staff member of Leader 

Reid, likewise, as you have studied this? What is going to be required in terms of the staffing of CFTC to get the job done, first 

of all, and getting rules out, which we understand, dealing with the 

international implications, the commercial users versus others, and 

finally, at least, bringing some confidence to the public? 

Mr. WETJEN. Thank you, Senator Lugar. As you point out in your 

question, while the Commission currently has responsibilities to 

implement Title VII, it has other missions, too, and one of those 

is through its Division of Enforcement. And so that includes moniVerDate Nov 24 2008 01:30 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 C:\DOCS\71633.TXT MICHA
12 

toring these markets and making sure that there is not manipulation and fraud. So that is a very important mission, obviously. 

I think, given the size of the mission that is now the overall mission that now stands before the Commission that comes from Title 

VII, I think it would be hard to dispute that the agency needs resources. It probably needs more resources. If you just look at the 

size of the swaps markets, which are exponentially larger than the 

futures markets that the agency has been overseeing up until now, 

I think you would reasonably come to that conclusion. 

I recognize we are in difficult times here and so I think the use 

of resources by the agency needs to be carefully considered and 

needs to be carefully allocated, and so, Senator, what I would want 

to do if given the honor to serve is speak with my fellow Commissioners, talk to the Chairman, get a handle on where these resources need to be allocated first, and help try and get those resources to the extent I can contribute. 

One other thing I might add is that I know Commissioner 

O’Malia has been a leader on this. Again, given the nature of how 

these markets have evolved, it is also important to ramp up the 

technology, the use of technology at the agency. So I think that is 

another area where I would be interested in trying to contribute. 

Senator LUGAR. Well, I hope as a Commissioner that you will 

help to inform us of what is going on so that we can best interpret 

and bring a sense of confidence to all this. 

I just have, and this may be a gross oversimplification, but there 

are brilliant people in America thinking about how to game the 

system. I am not one ever to diminish free private enterprise and 

the desire to make money on behalf of financial institutions or anybody else. I just want to make certain that it is a reasonably even 

competition among those who count upon you and count upon us 

for a system that brings confidence, transparency, the lack of systemic risk, all of the above, because at least the testimony we 

heard three years ago before this committee, as things were unfolding at that point, it appeared that we had been outgamed. We had 

lost the contest intellectually. 

And so I appreciate your mention of the technology that may be 

involved, but likewise, the ability to have the staff to at least keep 

track of all the elements that are involved in this, and I thank you 

very much for your testimony. 

Mr. WETJEN. Thank you, Senator. 

Chairwoman STABENOW. Thank you very much. 

I am going to turn to Senator Klobuchar, and I also am going to, 

at this point, Mr. Wetjen, excuse myself for an Energy markup 

where they are telling me I need to be casting votes in another part 

of the building. And so I am going to at this point turn things over 

to the capable hands of Senator Klobuchar as well as Senator Roberts to continue the hearing. 

Let me just also indicate to my colleagues that while we will not 

be voting today on the nomination, we will be polling the members 

of the committee and looking for a time to hold the vote in the near 

future. 

So, again, welcome and congratulations. I look forward to moving 

forward and working with you, and at this point, I am going to 

turn it over to Senator Klobuchar. 

13 

Mr. WETJEN. Thank you, Chairwoman. 

Senator KLOBUCHAR. [Presiding.] Thank you very much. Hello, 

Mr. Wetjen. 

Mr. WETJEN. Hello, Senator. 

Senator KLOBUCHAR. I have to tell you, I was out and coming 

back in from another hearing and saw your son out there. How old 

is he? 

Mr. WETJEN. Sixteen months. 

Senator KLOBUCHAR. He was reading Congressional Quarterly. 

[Laughter.] 

Senator KLOBUCHAR. Senator Thune saw it, as well. He can be 

my witness. He literally had it in front of him. Anyway, I was quite 

impressed, so I do not even know if I need to ask you any questions, but—— 

[Laughter.] 

Senator KLOBUCHAR. I think you know that your nominations 

comes during a critical period in the history of the Commodity Futures Trading Commission—all the new responsibilities under 

Dodd-Frank, the risk taking that led up to the financial crisis, the 

realization that we have to do things differently so that it does not 

happen again. 

So my questions are, first of all, pertaining to my State. Our 

State boasts the largest number of agricultural co-ops in the country and there has been a concern that they would be classified as 

a swap dealer under the new rules. Senator Thune and I Co-Chair 

the Congressional Farmer Co-Op Caucus and I believe that we 

must maintain the ability of farmers to band together to market 

their products and manage their risk in some very difficult market 

times. 

So, Mr. Wetjen, do you believe that this legislation should be implemented in such a manner to protect these types of risk management tools utilized in rural America? I am talking here about the 

Dodd-Frank law. 

Mr. WETJEN. Yes, Senator, I do. 

Senator KLOBUCHAR. That is good. That would be all right, do 

you think, Senator Thune? 

Senator THUNE. Let us go home. 

[Laughter.] 

Senator KLOBUCHAR. Okay. 

Mr. WETJEN. No, if I can add to that, Senator, I mentioned in 

the opening statement that one of the goals, as you know, of DoddFrank is to try and mitigate systemic risk. I think it is fair to say 

that cooperatives do not strike most people as the sorts of entities 

that are going to pose that type of risk on the financial system. So 

again, I think if the Commission hews closely to Congressional intent and does so when trying to define some of these entities, including swap dealers, I think it is going to come out with the right 

result. 

Senator KLOBUCHAR. Very good. I was also pleased to see that 

the Chamber of Commerce praised your work with the business 

community over the last seven years while you served as an aide 

to Senator Reid. In their comments, they also pointed to the years 

of practical legal experience you gained in the financial services 

14 

sector prior to coming to work in the Senate. Could you talk about 

this experience and how you think it will help you at the CFTC. 

Mr. WETJEN. Yes, Senator. When I was an attorney, I practiced 

in a number of different areas, including financial services, as you 

said, and I think probably the main benefit that experience has for 

me is I understand how legislation, and I think I understand or 

would be quickly able to understand at the agency, if I am able to 

serve there, how the rules impact the private sector and impact 

business. 

And so as an attorney representing companies who are grappling 

with compliance, you could see the challenges that came with that. 

And so I think it gives me a practical background that I think 

could serve me well if I were to serve on the CFTC, because I have 

an understanding of what these rules mean and, in fact, how they 

can change how businesses operate. And so I would be sensitive to 

that. 

Senator KLOBUCHAR. Thank you. Obviously, I care a lot about 

that. We have a lot of end users that fall under exceptions to the 

rule that operate in our State. We have worked very hard to make 

sure that we differentiate some of the speculation issues from legitimate end users and those that may be playing more of a speculative role. I want to make clear, while I care about the exception, 

I also care a lot about the excessive speculation in the energy market. I am sure you are aware that the CFTC was required by law 

to implement position limits back in January. It has not happened 

yet. The recent run-up in gas prices, while they may have fallen 

off somewhat, have had a significant impact on our economic recovery. I know that in my State right now, we are struggling. Five 

mid-size cities are having their airline service reduced or eliminated by Delta and the reason given was the oil prices. 

So I think the evidence is pretty clear that excessive speculation 

can contribute to volatility in the market. I will not ask you to comment on the ongoing work the CFTC is doing to implement DoddFrank in this area, but I am hoping you would share your views 

on this part of the legislation and position limits. 

Mr. WETJEN. Thank you, Senator. In Dodd-Frank, the legislation 

provided the CFTC with an additional tool to try and combat manipulation. Position limits have been in place, as you know, in the 

futures space, but they had not been in place for the swaps markets. So that is the goal behind the position limits rule generally, 

is to give the agency an additional tool. 

As I said earlier, I think it is very important, however, that in 

crafting this rule that the Commission remains mindful of the impact the rule could have on liquidity in the swaps markets. If liquidity dries up, there are no swaps markets, and so these very 

markets that some of the co-ops and other end users in your State 

rely on for risk management would be diminished and that is not 

a desirable outcome, either. So some way, the Commission needs 

to balance these two interests, and that is what I would try to do 

if I were given the honor to serve. 

Senator KLOBUCHAR. Thank you very much. 

With that, Senator Thune, the Co-Chair of the Congressional 

Farmer Co-Op Caucus. Senator Thune. 

15 

Senator THUNE. Thank you, Madam Chairwoman, and I would 

echo the issues and concerns that you have raised about cooperatives and how they might be impacted by this, and Mr. Wetjen, 

thank you for appearing here today and responding to some of 

those concerns. 

I am, in particular, concerned about the limited definition the 

CFTC is looking to instate for the de minimis exception when defining swap dealers. Elevators and local co-ops provide important 

risk management opportunities for producers and they are hardly 

the large systemically important entities that Congress intended to 

be regulated by this law. And so including them in the definition 

of swap dealers will only raise prices for producers and limit their 

chances to engage in bona fide hedging. 

So I appreciate the remarks that you have already made with regard to that issue, but I would simply say that the reason some of 

this stuff is so important, if you look at the de minimis exception 

in the proposed rule, if you limit the number of swaps and options, 

which under options is 20 and counterparties 15, only those that 

are registered and regulated as swap dealers would be in a position 

to offer hedging projects to the ag sector. And in addition to the 

$100 threshold—in addition, that $100 million threshold would significantly limit the volume of hedges that could be offered by any 

entity besides registered swap dealers. 

Now, just to put that into context, for example, in today’s environment, it will only take about eight million bushels of soybeans 

and around 15 million bushels of corn to exceed that threshold. 

And just by way of comparison, the U.S. produced last year 12.4 

billion bushels of corn and 3.3 billion bushels of soybeans. 

So that is why getting this right is really important, and the only 

thing I would ask is that you, as you have already indicated, provide us an assurance that when you look at these things, and I 

know there is a large amount of information to absorb given the 

complexity of the rules and the broad impacts that they are going 

to have, but I hope that you will take time to understand these 

issues and the implications that they have for agriculture and the 

needs of these commercial end users. 

So I hope we can count on you to give great consideration to 

those impacts and making sure that agricultural producers have 

the tools that they need to manage risk in what is an increasingly 

sort of volatile commodity market, and I think it is going to be even 

more important that they have those tools available to them. If you 

could, I guess, reassure us that that is certainly something that 

you are going to give particular attention to, I know I would certainly appreciate it, as would some of my colleagues on the panel. 

Mr. WETJEN. Thank you, Senator Thune. Well, first of all, you 

have my pledge to take the time I need to make sure that I have 

the information I need to make a good decision, if I were given the 

honor to serve on the Commission. 

Again, the goal of Dodd-Frank is to—one of the goals is to mitigate systemic risk, and to the extent there are companies that do 

not contribute to systemic risk or do not cause it, they should not 

unnecessarily be wrapped up in the implementation of Title VII. So 

that is my belief and that is something that I would—that is a belief I would carry to the Commission. 

16 

Senator THUNE. Let me ask you just a couple of things about factors that you think the Commission ought to consider when making 

new capital and margin requirements. Obviously, it seems like you 

would concur that you ought to consider whether an institution is 

systemically important. Would you—I guess, would it be your view 

that users who are not systemically important be allowed to front 

less capital? 

Mr. WETJEN. I think that, with respect to both the margin and 

the capital rule, the approach of the agency so far has been to focus 

on the swap dealers and major swap participants and I think that 

is the right direction to go in this. I agree with you, Senator Thune, 

that we should not be unnecessarily adding to the cost burdens 

that end users have already. We need to make sure that these 

swap markets and derivatives markets continue to be made available and that is a function to some degree, at least, a function of 

how profitable and how well these end users are doing, which is 

a function of how much capital they need to put up for regulatory 

compliance. So that is an issue I would always take very seriously. 

Senator THUNE. Should the Commission consider the economic 

cost of tying up capital in margin requirements, the economic 

costs? 

Mr. WETJEN. Well, I think the law requires the agency to carefully go through a cost-benefit analysis of every rule that it promulgates, and to the extent that that includes what you just mentioned, of course, I would be supportive of that. 

Senator THUNE. Should end users who are hedging financial risk 

be given an exemption? 

Mr. WETJEN. I am sorry. Could you repeat that, Senator? 

Senator THUNE. Should end users who are hedging financial risk 

be given an exemption? I guess what I am getting at is if the answer is no, will it not make it more expensive for these users to 

hedge their risk and, in turn, make the financial system more unstable? 

Mr. WETJEN. I agree, it could have that outcome. I think in determining these exemptions, again, I think if the agency stays 

closely to what the statute is trying to accomplish, which is mitigate systemic risk, I think this issue, like the rest, will be properly 

resolved by the Commission. 

Senator THUNE. Okay. My time has expired, Madam Chair. 

Thank you. 

Senator KLOBUCHAR. Thank you very much, Senator Thune. 

I know Senator Roberts has a few more questions. 

Senator ROBERTS. Thank you, Madam Chairwoman. 

The President issued an Executive Order January 18 in regards 

to a cost-benefit analysis that should be provided prior to any rulemaking or promulgating of rules. At first, the independent agencies 

thought they were exempt, but the President came back and said, 

no, you are under the scope. Commissioner Summers has been the 

champion of trying to take a look and make sure that the cost-benefit analysis is accurate and there is enough time to do it. I think 

that prior to the IG’s intervention, that there was a concern that 

the cost-benefit analysis on these rules—and there are so many of 

them, as I have indicated—40—was superficial and that we need 

enough time and that the recommendation was to bring an econoVerDate Nov 24 2008 01:30 Mar 27, 2012 Jkt 000000 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 C:\DOCS\71633.TXT MICHA
17 

mist in, hopefully one with one arm so he could not say, ‘‘on the 

other hand—′′ 

[Laughter.] 

Senator ROBERTS. At any rate, an economist in along with the 

Office of General Counsel and it was not just a superficial look. So 

now you have got a team, and I know that you have indicated to 

me that you think that this is a requirement. After all, the President did indicate an Executive Order. 

So if you find out that the Commission’s own analysis is flawed 

as determined by this cost-benefit analysis, what are you going to 

do to correct it? Are you going to join with Commissioner Summers 

and say, hey, this is not going to work out very well until we find 

out. Make sure that this analysis is a substantial one and is a correct one. 

Mr. WETJEN. Well, Senator Roberts, I do agree that the cost-benefit analysis has to comply with the requirements of statute, so it 

has to be sufficiently rigorous, and I would look forward to working 

with Commissioner Summers on this and every other issue before 

the Commission. 

Senator ROBERTS. I appreciate that. I posed to the Chairman 

during our last hearing a Kansas county elevator expects in the 

near future to enter into forward contracts with the area wheat 

farmers at a fixed price with delivery at a later date. So to hedge 

this risk, the elevator goes short on wheat futures, and I asked the 

Chairman, is that a bona fide hedge? The question has since been 

asked of the CFTC General Counsel and of career staff. We now 

have three different answers—three. Would you like to weigh in? 

What is your view? Is that a bona fide hedge? 

Mr. WETJEN. Senator, I would like to weigh in by saying that the 

grain elevator that you describe should be able to do that transaction and should be able to do it without unnecessary costs or regulatory burdens. 

Senator ROBERTS. Well, that is a very good short answer and I 

appreciate that. 

I do not know why we are into a ‘‘he said, she said’’ or whatever 

debate or back and forth with Europe, but I go back to the senior 

Deutsche Bank executive who recently said that Europe has a relative pragmatic approach to reforming derivatives and it offers a 

terrific opportunity at the expense of the United States, which 

risks scoring one of the biggest own goals in financial market history. That was in Reuters back in June. 

A senior British regulator recently said that to suggest that the 

U.S. sets a gold standard that other markets should follow is nonsense, as in the Financial Times, June 8. 

Now, we have those statements, and then you have the Japanese 

letter that was on your website, and we had to refer it to you to 

figure out, even though it was on your own website—not yours, but 

the CFTC’s, where the Japanese said, whoa. Wait a minute. We 

might not even do trade with the United States. 

And then we have Secretary Geithner’s statement of the same 

time that European regulations are tragic, and that the U.S. is 

going to bring the rest of the world with us. 

And I do not understand why we have to get into an international shouting match here. I do not get it, why we have to be 

18 

saying things like that, stirring up dust over there and then they 

stir up dust over here. Lord knows, we have enough problem with 

trade than doing something like this. So I think the CFTC ought 

to stick to their business, and maybe—you never get hurt by what 

you do not say. Any comments? 

Mr. WETJEN. Well, I wish I could take your advice, but I will give 

you an answer, Senator Roberts. I think that, again, the goal of 

Dodd-Frank with respect to Title VII and the goal of the agency, 

the goal of the CFTC, is to protect the U.S. financial system, to try 

and mitigate systemic risk but to protect the U.S. financial system. 

It is not to try and make U.S. firms operating overseas less competitive. 

I do think there has to be some way to meet both of these objectives. I am confident there is a way to meet both objectives. I recognize, again, that there is interconnectivity between these derivatives markets globally, and so that has to be taken into account. 

We have seen some of the risks of contagion from one market to 

another, even here in the last number of months with respect to 

the European debt crisis. So that always has to be borne in mind. 

But, as I said, I think there is a way to do this, protect the U.S. 

financial system but not unnecessarily harm our U.S. firms that 

are operating overseas. 

Senator ROBERTS. Why do we not adopt a policy, instead of taking a Brillo pad to the issue verbally, and simply smother our 

friends with the milk of human kindness and reason and maybe we 

would not get into some of these issues that make the press and 

make our job a lot more difficult. With that, I am way over time, 

and I see the distinguished Chairwoman is coming back to make 

me behave. 

[Laughter.] 

Chairwoman STABENOW. [Presiding.] Well, I apologize for pingponging back and forth this morning, but I know you understand, 

Mr. Wetjen. 

Mr. WETJEN. I do. 

Chairwoman STABENOW. You have been here and certainly understand our efforts in the Senate of trying to be two places at 

once. 

I did want to ask a couple of other questions, though, and I 

apologize to my colleagues if, in fact, these have been asked, but 

I did want to just reinforce a couple things that we have been talking about. 

One is regarding position limits. When we talk about the excessive volatility in the commodity markets, especially when it comes 

to oil prices and grain trading, and certainly that is being debated 

in the Energy Committee, as well, there is an ongoing debate about 

what forces impact that volatility. I wonder if you might tell us 

what you think the role of speculation is in moving markets and 

are position limits an effective tool to curb volatility. 

Mr. WETJEN. Thank you, Madam Chairwoman. I would like to 

respond by making a couple of observations, if I may. The first is 

that there have been a number of reports here recently, both from 

the CFTC and from other financial institutions, that there does appear to be more speculative activity in some of these commodity 

markets. Meanwhile, in the last several years, I think it is fair to 

19 

say we have seen a fair amount of volatility in the crude oil market 

and some others, as well. Congress has decided to give this new authority to the CFTC to apply position limits, if deemed appropriate, 

and I understand that the goal behind that was to add another 

weapon in the CFTC’s arsenal to try and combat manipulation and 

unreasonable price fluctuations. 

So I think in deciding how to craft this tool and deciding how to 

use it, the Commission needs to be very careful and deliberative 

and they need to consider closely all market data that is available 

to it and ensure that any rule is not going to dry up liquidity in 

these markets, but I think that that objective, or those two objectives, can be met. 

Chairwoman STABENOW. Thank you. I know colleagues, as well, 

have talked about the international harmonization, and we have 

talked about that at other oversight hearings and a very important 

piece of going forward in a global economy. I wonder if you might 

just speak a little bit more about how far you believe the CFTC’s 

jurisdiction reaches into other countries and territories. How do 

you see the relationship with the CFTC and international regulators working right now, and how would you work to strengthen 

the coordination between, and particularly when we see Europe 

certainly going at a solar pace, certainly a different timetable than 

we are and certainly in Asia a very different situation. 

Mr. WETJEN. Thank you, Madam Chairwoman. As Senator Roberts has pointed out a couple of pieces of correspondence from regulators overseas, and I think it might be fair to say that there could 

be better coordination between U.S. regulators and their counterparts abroad, and if given the privilege to serve, I would like to 

help the Commission on that score. 

Generally, I think the CFTC’s mission is to protect the U.S. financial system first and foremost. There is, again, interconnection 

between our markets and markets abroad. But the way the statute 

was drafted is to basically make sure the focus of the agency’s work 

is here in the United States, is focused on transactions that are 

here in the United States, and then just with few exceptions is it 

to drift off the shores. And I think it is only permitted—the agency 

would only be permitted to do that if absolutely necessary. But, 

again, I think there is a way to do that, meet that objective while 

at the same time ensuring that our U.S. firms operating overseas 

are not unnecessarily disadvantaged. 

Chairwoman STABENOW. Thank you. And then, finally, we are 

hearing a lot of discussion and a lot of important work about sequencing and phasing in the reforms, and I wonder how you might 

respond to the tension between those who say the CFTC is moving 

too slowly and those who would say the CFTC should delay implementation. 

Mr. WETJEN. Thank you, Madam Chairwoman. The market participants are in search of clarity and they are in search of certainty, and I think it is the agency’s duty to provide both as quickly 

as possible. 

I think there are a number of different tools that the agency can 

use to provide that, and so I would be interested in working with 

the other Commissioners, working with the staff in trying to figure 

20 

out the best way to provide that clarity, to provide that certainty, 

with respect to how these rules are phased in. 

And so at this moment, I do not have the best judgment about 

the way to go about doing that, but I think that always has to be 

the goal, and if that remains the goal, the agency will end up with 

a proposal that makes sense for the markets. 

Chairwoman STABENOW. Thank you. 

Senator Roberts, did you have any other questions? 

Senator ROBERTS. I am going to submit the questions for the 

record, but I have just one here. The Commission acted on July 14 

to issue an order to provide some relief from some of the requirements that proved rather nettlesome, and after urging by several 

members of this committee, I might add. Some observers believe 

that the relief was not as clear-cut as they had hoped, but did appreciate very much that the CFTC took action to provide legal certainty. We did not want a swap purgatory. Many of us are concerned, however, that this relief expires on December 31. It is hard 

to figure out what is appropriate in terms of the time frame here, 

but I would like to ask you to monitor this situation and work with 

the other Commissioners to ensure that meaningful relief that provides legal certainty would continue beyond December 31 if the 

regulations to implement Dodd-Frank are not complete. 

Mr. WETJEN. Senator, you have my pledge to do so. 

Senator ROBERTS. I appreciate all of your answers and wish you 

well. 

Mr. WETJEN. Thank you. 

Chairwoman STABENOW. Thank you very much. 

I want to thank everyone again today. Mr. Wetjen, thank you. I 

thank your family, the Commissioners that are with us, and particularly Commissioner Dunn, thank you for your service. We appreciate your candid responses, Mr. Wetjen. I believe you have 

proven to be a thoughtful and independent candidate. I think this 

position is extremely important. It really cannot be overstated. And 

the fact that CFTC Commissioners are currently voting on rules 

and regulations that will fundamentally change our financial markets and impact our economy for years to come certainly means 

that this is a very, very important time. So we wish you well. We 

look forward to working with you. 

As I indicated earlier, we will be looking for a time— working 

with Senator Roberts, we will find the time to be able to have a 

vote in the committee in the near future. I congratulate you again 

on your nomination. 

A quick note to Senators that questions for the record are due 

to the Committee Clerk by 5:00 p.m. on Monday, July 25. 

The meeting is adjourned. 

[Whereupon, at 11:17 a.m., the committee was adjourned.] 

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A P P E N D I X 

JUNE 21, 2011 

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DOCUMENTS SUBMITTED FOR THE RECORD 

JUNE 21, 2011 

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QUESTIONS AND ANSWERS 

JUNE 21, 2011 

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