A clash between two of Wall Street’s top regulators is beginning to spill out into public view. The friction over how to police financial markets involves two Biden appointees aligned with Democrats: CFTC Chair Rostin Behnam and fellow Commissioner Christy Goldsmith Romero. For months, the two have shown signs of being at odds over a range of policy issues, from crypto to cybersecurity rules. But the divide, which in part reflects concerns by progressives that the agency is acting too conservatively, came to a head last week. In a rare move, Behnam had to rely on support from Republican CFTC commissioners last Wednesday to issue a proposal that would loosen post-financial crisis collateral requirements for certain derivatives. Behnam called it a “thoughtful and deliberate proposal,” while framing it as fine-tuning around the edges. But Goldsmith Romero, who previously served as the government watchdog for the Troubled Assets Relief Program, rebuked the move. She told MM “we don’t know what the consequences are going to be” of easing requirements from the 2010 Dodd-Frank law. Tyson Slocum, energy program director at Public Citizen, said there has been a natural push and pull between Behnam’s “more moderate chairman style” and Goldsmith Romero’s “more aggressive” approach. “Often in D.C., people think that Democrats and Republicans are monolithic,” Slocum said. “That’s not the way it always works.” Former CFTC Republican Commissioner Dawn Stump said the agency has historically pursued a “consensus-driven” agenda and that Behnam “is very much true to the spirit of the traditional CFTC.” To be sure, Behnam has sought to tackle top financial policy priorities for Democrats, including climate risk concerns and crypto oversight. The former long-time aide to Senate Agriculture Chair Debbie Stabenow (D-Mich.) led work on a landmark 2020 government report detailing climate risks in the financial system, and is gearing up to issue guidance on carbon trading standards. He is also urging Congress to give his agency more authority to regulate crypto markets. But as one veteran of the CFTC world framed the approach: “It’s not a big sweeping policy agenda. He’s looking to make incremental change in the industry from the regulatory perspective.” “I’m worried that the agency is doing a lot of information gathering and is running out of time to enact concrete policy,” said Todd Phillips, a long-time investor advocate and professor at Georgia State University. Goldsmith Romero has regularly pushed the agency to more aggressively rethink whether its rules are tough enough and is now confronting Behnam openly. A Behnam spokesperson declined to comment. “I’d like to see the CFTC doing more to address risk in our markets,” Goldsmith Romero told MM. IT’S THURSDAY — Send tips, gossip and suggestions to Sam at ssutton@politico.com and Zach at zwarmbrodt@politico.com
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