Wetjen quietly makes waves at CFTC

Zachary Warmbrodt | POLITICO Pro

As the Commodity Futures Trading Commission wrestled with major changes stemming from the 2010 Wall Street oversight law last year, President Barack Obama tapped Mark Wetjen, a top aide to Senate Majority Leader Harry Reid, to fill a crucial seat on the agency.

Reid’s affinity for partisan politics is well known. But almost a year after Wetjen was confirmed to be a member of five-member CFTC board, the role he has and will play at the CFTC remain difficult to define.

Wetjen has proven to be neither a rubber stamp for Obama’s point man on the commission, Chairman Gary Gensler, nor a reliable ally to the industry and lobbying groups who oppose many of the rules the agency is writing.

Wetjen, the six-foot-four former counsel and senior policy adviser for Reid, is following through on a pledge he made after his old boss vouched for him at a Senate confirmation hearing: to have an independent and open mind.

“He’s always willing to listen,” said CFTC Commissioner Jill Sommers, who was first confirmed to a Republican slot at the commission in 2007. “It’s really refreshing to have somebody who’s willing to just sit down and talk through issues. … It’s very unusual.”

But Wetjen is causing some heartburn for Hill Democrats and public interest groups who want him to be more aggressive toward the industry.

“He’s caught some flak here from Democrats on the Hill,” one Democratic aide said. “There are a lot of folks who are concerned that Mark is trending too far moderate for what we think financial reform and derivatives reform should be.”

Some of the worry stems from comments he made last month on one of the most critical and controversial aspects of the CFTC’s new derivatives regulations: how the rules apply to transactions that cross borders.

Wetjen said the United States would have to rely on other countries, to some extent, to enforce their own derivatives rules on international activities that somehow touch the U.S. economy. The commission, which has struggled to get increased funding while taking on new Dodd-Frank responsibilities, proposed the approach in tentative guidance it issued in June.

“Permitting substituted compliance is not tantamount to abdicating the commission’s responsibilities,” Wetjen said in a Sept. 13 speech.

His remarks disappointed watchdog groups, however, who argue handing over such policing activities could open big loopholes and create problems similar to those that led to taxpayers bailing out American International Group during the financial crisis.

“Winning a Wetjen vote should not require compromising taxpayers,” Public Citizen financial policy advocate Bart Naylor said.

In the coming months the commission will vote to finalize several important rulemakings providing Wetjen the opportunity to assert himself and put a stamp on how the CFTC will implement Dodd-Frank. They include rules on capital requirements and swaps trading on newly regulated platforms.

Wetjen is seen as potential swing vote although some inside and outside the agency said that depending on the issue any commissioner can play that role.

“If I was considered the swing vote, it’s safe to say that he is too, but any of the commissioners are,” said Michael Dunn, whose spot on the commission Wetjen took over. “The chairman has to get to three votes, but I think Mark has done a very, very good job of weighing things and not rubber-stamping and not saying, 'Well, this is a partisan issue.' I don’t think he sees it as politics.”

Wetjen, a quiet Iowan who is press shy, declined to be interviewed on the record for this article. While other CFTC commissioners are frequent commenters in the media, Wetjen has yet to do a sit down interview since he was sworn into the job on Oct. 25.

Wetjen’s careful approach to his new job tracks with those who knew him as Reid's aide, where he helped usher through some of the most complex aspects of financial reform more than two years ago — the same legislation he is now turning into formal rules.

On the Hill he was seen as a conciliator, not an advocate.

For instance, when the Senate Banking Committee and the Agriculture Committee were coming to blows in early 2010 over how to reconcile competing versions of the derivatives provisions in the Dodd-Frank Act Wetjen helped smooth over the differences.

"Mark was given the most difficult task and performed it," said Ed Silverman, who was the Senate Banking Committee’s staff director at the time. "He sat there and he arbitrated, and he kept the process moving, and he kept the committees honest."

At times Wetjen has tried to play a similar role among CFTC commissioners.

A July 10 public commission meeting started late as Wetjen tried to convince CFTC Commissioner Bart Chilton, a proponent of limits on oil speculators and regulations for high-speed “cheetah” traders, to get on board with one of the agency’s most critical rulemakings: the final definition outlining the types of swap contracts that will be regulated.

Chilton, who most often votes with Gensler, said no to the measure because he believed it had an “icky” loophole.

“Balance is in the eye of the beholder,” Chilton said, defending Wetjen’s independence. "There are times where he may be a little more moderate than I am but that's OK.”

So far Wetjen has maintained good relations with industry groups and Republicans who have clashed with the agency, and Gensler in particular, even though has supported rules they criticize.

“Politics is probably always part of the calculus in Washington,” Commodity Markets Council president Sanjeev Joshipora said. “But with Wetjen I get the sense it’s about the right policy.”

He’s also winning some praise Republicans on the Hill, including Dodd-Frank critic Scott Garrett, the New Jersey Republican who chairs a House subcommittee on capital markets, who said Wetjen has been open to Republican input.

“It’s good to have that level of involvement,” Garrett said. “We don’t necessarily see that as much from Mr. Gensler.”

Gensler’s term as chairman ended in April but he is able to keep doing the job for now.

He would likely have a difficult time getting confirmed by the Senate again if Obama were to win a second term and renominate him.

Gensler has irked Democrats and Republicans for the CFTC’s Dodd-Frank rule writing, for either moving too fast or not being aggressive enough. Lawmakers have been critical of the chairman for the agency’s handling of two futures brokerage failures and the loss of customer funds.

That has put Wetjen’s name into the rumor mill for chairman although at this point it’s mostly just the Washington speculation game.

Wetjen said in a statement that his “sole and exclusive focus" is on being the best commissioner he can be.

His supporters said they don’t think it would be a stretch for him to lead the agency or possibly run for office one day.

“You can pick it up, you can be trained, but Mark is one of those people who innately takes to politics,” Silverman said.

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