By Pete Kasperowicz
House Financial Services Committee Ranking Member Barney Frank (D-Mass.) on Tuesday night defended an amendment to the agriculture appropriations bill that would nearly double funding for the Commodity Futures Trading Commission (CFTC).
Speaking on the House floor, Frank said reduced CFTC funding would prevent the agency from regulating derivatives, including oil derivatives. Several Democrats spent much of the day Tuesday arguing that this would only make it harder for the agency to prevent commodity price spikes caused by speculation.
"The CFTC, we think, should be able to say to people who don't use the commodity, please don't buy it up and hold it off the market so you can then sell it when the price goes up and make a profit," Frank said.
He also rejected the argument that Democrats believe speculation is the most important factor leading to higher gasoline prices. "No, I do not think speculation is the major cause," he said, noting that some believe 20 percent of rising prices may be due to speculation. "We are saying you can reduce it by 20 percent," he said.
Frank added that Republicans seem intent on ensuring the CFTC is unable to fulfill its new responsibilities under last year's Dodd-Frank financial reform law. "It is an effort to make speculation free of any regulation with the consequent increase in food prices and energy prices," he said.
Under the bill, H.R. 2112, the CFTC would be funded at $172 million. That's $30 million less than it is currently funded, and almost half of the $308 million that the Obama administration proposed.
The amendment under discussion Tuesday night, from Rep. Rosa DeLauro (D-Conn.), would increase funding to the level of Obama administration's request, but then decrease funding by the same amount. The amendment would therefore have no effect, and was meant to launch a debate on the floor. Republicans tried to shut off debate by simply accepting the meaningless amendment, but Democrats rejected this in order to have the debate.
During the discussion, Rep. Jack Kingston (R-Ga.) repeatedly argued that Democrats were incorrectly accusing Republicans of not supporting the amendment.
"The DeLauro amendment does not do anything," he said. "We accept the DeLauro amendment, and I'm not sure that the folks over there who are speaking for the DeLauro amendment have read the DeLauro amendment, because if they would, they would know it does nothing to restore the funding."
Kingston also broadly rejected Frank's arguments, and said Democrats are overstating the importance of the CFTC.
"I just find it incredible that I'm hearing people say that the fault of the Wall Street meltdown was because of the CFTC not doing its job," he said. He addd he doesn't believe that "the solution to lower gas prices is to fund a bureaucracy."
The House resumed work on amendments to the agriculture spending bill at 7:30 p.m., after several hours of repetitive debate in which Democrats protested cuts to various agriculture programs, and Republicans responded by saying cuts are needed in light of the federal government's fiscal crisis.