Lost In Translation: The Future of the Raw Materials Negotiating Committee

//i113.photobucket.com/albums/n216/cbrayton/Stuff/picapfn.jpg?t=1206982201” contém erros e não pode ser exibida.
G. Edward Griffin exposes the most blatant scam of all history. It’s all here: the cause of wars, boom-bust cycles, inflation, depression, prosperity. It’s just exactly what every American needs to know about the power of the central bank.”

Plano prevê fortalecimento da SEC nos EUA: The Paulson plan “will strengthen the U.S. Securities and Exchange Commission,” reports Exame magazine (Editora Abril), passing along a wire-service report from the Agência Estado (Brazil), which cribs its coverage in turn from the Dow Jones Newswires.

Which is an odd analysis. Something may have gotten lost in translation here.

I have not been following the matter closely, but the prevailing wisdom seems to be that the Federal Reserve will centralize regulatory authority under this plan, relegating the SEC to the regulatory backwaters.

Embittered SEC watchers having been heard to complain that the agency sent up by the Exchange Act of 1933 to prevent catastrophic market meltdowns after the Crash of 1929 has a long and undistinguished history of egregiously failing to do precisely that.

O plano do Tesouro dos Estados Unidos para reformar o sistema regulatório financeiro dos EUA prevê a fusão do órgão regulador do mercado de capitais (Securities and Exchange Commission, SEC) com a Comissão de Negociação Futura de Commodities (matérias-primas), trazendo as obrigações de supervisão das ações e dos mercados futuros para um único guarda-chuva, revelou o secretário do Tesouro dos EUA, Henry Paulson.

The plan submitted by the U.S. Treasury Dept. for reforming the financial regulatory system provides for a merger of the SEC with the [CFTC], bringing securities and futures under a single umbrella, Paulson revealed.

There is, of course, no U.S. regulatory agency called the Comissão de Negociação Futura de Commodities (the “commision on the future trading of raw materials,” as the Estadão would have us understand.)

If a Brazilian reader wanted to look the agency up after reading this story, there would not be able to.

The standard solution for this sort of situation might be to refer to it as

… a Commodities Futures Trading Commission (Comissão de negociação futura de commodities, ou CFTC, pela sigla em inglês)

Imagine if I were to write about the Brazilian presidency as the “High Plains Palace” because it is often referred to as the Palacio do Planalto. Or if you were to decide that my name is not Colin, but, what? Zé Bu?

The AFP wire story on the development follows this common-sense principle:

Entre as outras medidas anunciadas, encontram-se a criação de uma agência de vigilância de empréstimos imobiliários e a fusão da Securities and Exchange Commission (SEC), autoridade regulamentadora dos mercados financeiros norte-americanos, com a Comodity [sic] Futures Trading Commission, autoridade de regulação dos mercados de matérias-primas.

Also peculiar, to my ear, is the information that the word “commodities” means the same thing as matérias-primas (raw materials.) The usual dictionary translation is


The Brazilian commodities exchange is known, for that reason as the Bolsa de Mercadorias e Futuros (“the commodities and futures exchange.”) By extension, the CFTC would be, what, the Commissão [Sobre a Negociação] de Mercadorias e Futuros?

No discurso preparado para divulgação do programa de reformas regulatórias do Tesouro, Paulson disse que tal fusão iria eliminar o caráter federal das poupanças, desdobrando a Agência de Supervisão de Instituições de Poupança ao órgão regulador bancário nacional, a Autoridade Controladora da Moeda.

In a speech announcing the Treasury’s regulatory reforms, Paulson said this merger would eliminate the federal character of savings accounts, adding the function of the [FDIC] to the national banking regulator, the [Office of the Comptroller of the Currency].

O plano prevê ainda que, pela primeira vez, a indústria de seguros terá regulamentação federal, com a criação de um novo escritório nacional de seguros dentro do Departamento do Tesouro americano, para supervisionar as companhias de seguros que escolheriam uma jurisdição federal opcional.

The plan also provides for federal regulation of the insurance industry for the first time ever, with the creation of a new national insurance office inside the U.S. Treasury department to supervise insurance companies who chose to operate in federal jurisdiction.

O programa também recomenda a criação de uma nova Comissão Federal para Originação Hipotecária, cujo diretor seria apontado pelo presidente. “A comissão iria avaliar, julgar e reportar a adequação de cada Estado para licenciar e regulamentar os participantes do processo de originação de hipotecas”, afirmou Paulson. As informações são da Dow Jones.

The program also recommends creating a new [Federal Commission on Mortgage Issuance] whose director will be a presidential appointment. “The commission will evaluate, judge and report on the compliance of each State to license and regulate mortgage issuers,” Paulson said. The reporting is by Dow Jones.

The CFTC press release on the Paulson proposal:

Washington, DC – Today, the U.S. Department of Treasury released a regulatory blueprint that includes recommendations to improve the U.S. financial regulatory structure with the goal of enhancing U.S. competitiveness in the global marketplace. Some of the proposals include recommendations related to combining the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). CFTC Acting Chairman Walt Lukken made the following statement in response to the blueprint:

“It is essential to examine ways to enhance the competitiveness of U.S. financial markets and seek improvements to the regulatory structure. Policymakers all strive for good government solutions that protect the public, reduce duplication and enhance competition and innovation. While I am still studying the Blueprint’s many recommendations, I applaud Secretary Paulson and the Treasury Department for their work on this critical undertaking and for recognizing the CFTC model of regulation as an advantageous one.”

“The CFTC utilizes a flexible and risk-tailored approach to regulation aimed at ensuring consumer protection and market stability while encouraging innovation and competition. Congress gave the CFTC these powers with the passage of the Commodity Futures Modernization Act (CFMA) in 2000, which shifted the CFTC’s oversight from a rules-based approach to one founded on principles. This prudential style is complemented by strong enforcement against market abuse and manipulation as evidenced by the $1 billion worth of penalties assessed by the CFTC since the CFMA. The regulatory balance fostered by the CFMA has enabled the futures industry to thrive and gain market share on its global competitors with volumes on the U.S. futures exchanges increasing over 500 percent since 2000. During recent economic stress, these risk-management markets have performed well in discovering prices and providing necessary liquidity.

“The SEC screwed the pooch, not us.”

Chairman Cox of the SEC:

“Recent events have provided further evidence, if more were needed, that financial services regulation in the United States needs to be better integrated among fewer agencies, with clearer lines of responsibility. Just as systemic risk cannot be neatly parceled along outdated regulatory lines, the overarching objective of investor protection can’t be fully achieved if it fails to encompass derivatives, insurance, and new instruments that straddle today’s regulatory divides. The proposed consolidation of responsibility for investor protection and the regulation of financial products deserves serious consideration as a way to better address the realities of today’s markets.”


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