In February 2012, a federal judge (Robert Wilkins) declined to halt the CFTC from implementing a Congressional mandate to limit oil contracts. Wall Street requested the injunction. The judge seemed concerned about how the CFTC is proceeding without detailed analysis and will make a ruling soon.
We can see how the rules are being weakened by on-going pressure from lobby groups who do not like "position limits." Goldman Sachs has its own take on speculation as a form of market making. That sounds familiar.
Federal judge weighs whether to let regulators rein in oil speculatorsRead the whole article here
By Kevin G. Hall - McClatchy Newspapers
WASHINGTON — A federal judge on Monday refused to halt efforts by a key regulator to limit excessive speculation in the trading of oil contracts — which is driving up oil and gasoline prices — but hinted that he might soon rule in favor of Wall Street and let speculation go unchecked.
Robert Wilkins, a judge on the U.S. District Court for the District of Columbia, declined a request for a preliminary injunction to halt the Commodity Futures Trading Commission from implementing a congressional mandate to limit how many oil contracts any single financial speculator or company can control.
However, Wilkins told both the CFTC and lawyers for the Securities Industry and Financial Markets Association and the International Swap and Derivatives Association that he expected to make a ruling soon on whether to hear the case. His line of questioning left both sides with the impression that he was concerned about how the regulatory agency has proceeded.
The two influential lobbies for Wall Street sought the injunction hoping to thwart what are called “position limits,” which were ordered by Congress as part of the landmark Dodd-Frank Act in 2010. The act was the broadest revamp of financial regulation since the Great Depression. The limits sought to prevent excessive speculation not just in oil but across the broad range of commodities, including farm products and metals.
Judge Wilkins expressed concern that Congress would direct the agency to impose market-wide limits without detailed study beforehand. President Barack Obama nominated Wilkins to the bench and the Senate confirmed him in 2010.
“That seems to me an astonishing position to take,” the judge told CFTC deputy general counsel Jonathan Marcus, who had said that Congress ordered the agency to first impose limits on oil trading, then other commodities.
As a sign of how high the stakes are, the trade groups hired Eugene Scalia to make their case. He’s the son of outspoken conservative Supreme Court Justice Antonin Scalia, and last year he won a key challenge to a Dodd-Frank rulemaking being carried out by the Securities and Exchange Commission. In that case, the courts struck down provisions that would have made it easier for shareholders to run candidates for corporate boards.
Congress ordered the CFTC to impose position limits, concerned that financial speculators now far outnumber producers, merchants and end users of oil and other commodities in the trading of contracts for future delivery of product _ known as futures contracts. Reporting by McClatchy has shown that these speculators now outnumber by more than 2-to-1 the traders who actually produce or consume oil.
An Article on how Goldman Sachs performs its magic on oil here