Editing Commodity Futures Trading Commission (section)

===Over-the-counter derivatives===
[[File:Brooksley Born.jpg|thumb|upright|[[Brooksley Born]]]]
In 1998 CFTC chairperson [[Brooksley Born|Brooksley E. Born]] lobbied Congress and the President<ref name=Hirsh20101213>{{cite news|url=https://archive.org/details/capitaloffenseho00/page/352|title=Capital Offense: How Washington's Wise Men Turned America's Future Over to Wall Street|pages=[https://archive.org/details/capitaloffenseho00/page/352 352 pages]|date=December 13, 2010|author=Michael Hirsh|isbn=978-0470520673|access-date=February 20, 2013|newspaper=The New York Times|url-access=registration}}</ref>{{page needed|date=January 2015}}<ref name="the_warning">{{citation |title= The Warning | publisher=[[Public Broadcasting Service|PBS]] | work= [[Frontline (U.S. TV series)|Frontline]]}}</ref> to give the CFTC oversight of 'off-exchange markets' for [[Over the counter (finance)|over-the-counter]] (OTC) [[Derivative (finance)|derivatives]] in addition to its existing oversight of exchange-traded derivatives,<ref name="conceptrelease">[http://www.cftc.gov/opa/press98/opamntn.htm "Concept Release Concerning Over-The-Counter Derivatives market"], CFTC Release #4142-98, May 7, 1998.</ref> but her warnings were opposed by other regulators.<ref name="nytimes">{{cite news|last=Goodman|first=Peter S.|url=https://archive.nytimes.com/www.nytimes.com/2008/10/09/business/economy/09greenspan.html|title=Taking Hard New Look at a Greenspan Legacy|work=The New York Times|date=October 9, 2008|page=A1|access-date=February 15, 2025}}</ref>

Two actions by the CFTC in 1998 led some market participants to express concerns that the CFTC might modify the "Swap Exemption" and attempt to impose new regulations on the swaps market.<ref name="wg_otc_deriv">{{citation|title=Over-the-Counter Derivatives Markets and the Commodity Exchange Act |url=http://www.ustreas.gov/press/releases/reports/otcact.pdf |publisher=President's [[Working Group on Financial Markets]] |work=press release |archive-url=https://web.archive.org/web/20101013165049/http://www.ustreas.gov/press/releases/reports/otcact.pdf |archive-date=October 13, 2010 }}</ref> First, in a February 1998 comment letter addressing the SEC's "broker-dealer lite" proposal, the CFTC stated that the SEC's proposal would create the potential for conflict with the Commodity Exchange Act (CEA) to the extent that certain OTC derivative instruments fall within the ambit of the CEA and are subject to the exclusive statutory authority of the CFTC.<ref>Letter from Jean A. Webb, Secretary, CFTC, to Jonathan G. Katz, Secretary, SEC (February 26, 1998).</ref>

In May 1998 the CFTC issued a 'concept release' requesting comment on whether regulation of OTC derivatives markets was appropriate and, if so, what form such regulation should take.<ref>Over-the-Counter Derivatives, 63 Fed. Reg. 26,114 (May 12, 1998).</ref> Legislation enacted in 1999 at the request of the [[US Treasury]], the [[Federal Reserve Board]], and the SEC limited the CFTC's rulemaking authority with respect to swaps and hybrid instruments until March 30, 1999, and froze the pre-existing legal status of swap agreements and hybrid instruments entered into in reliance on the 'Swap Exemption', the 'Hybrid Instrument Rule', the 'Swap Policy Statement, or the 'Hybrid Interpretation'.<ref>{{cite web | url=http://www.gpo.gov/fdsys/pkg/PLAW-105publ277/html/PLAW-105publ277.htm | title= Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 1999, § 760, as enacted in Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, Pub. L. No. 105-277, 112 Stat. 2681, 2681–35 (1998).}}</ref> The text of that act read: "...the Commission may not propose or issue any rule or regulation, or issue any interpretation or policy statement, that restricts or regulates activity in a qualifying hybrid instrument or swap agreement".{{citation needed|date=September 2024}}  Shortly after Congress had passed this legislation prohibiting CFTC from regulating derivatives, Born resigned.<ref name="the_warning"/> She later commented the failure of [[Long-Term Capital Management]] and the subsequent bailout as being indicative what she had been trying to prevent.<ref name="the_warning"/><ref group=notes>Born was the focus of an October 2009 Frontline documentary titled "The Warning" and was also chronicled in the documentary ''[[Inside Job (2010 film)|Inside Job]]''. The two films recount her attempts to investigate and regulate the OTC [[derivative (finance)|derivative]]s market (PBS Frontline The Warning)</ref>