[Senate Hearing 117-601]
[From the U.S. Government Publishing Office]
S. Hrg. 117-601
NOMINATIONS OF THE HONORABLE CHRISTY
GOLDSMITH ROMERO, MS. KRISTIN N.
JOHNSON, MRS. SUMMER KRISTINE MERSINGER,
AND MS. CAROLINE D. PHAM
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
March 2, 2022
__________
Printed for the use of the
Committee on Agriculture, Nutrition, and Forestry
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available on http://www.govinfo.gov/
__________
U.S. GOVERNMENT PUBLISHING OFFICE
50-069 PDF WASHINGTON : 2023
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COMMITTEE ON AGRICULTURE, NUTRITION, AND FORESTRY
DEBBIE STABENOW, Michigan, Chairwoman
PATRICK J. LEAHY, Vermont JOHN BOOZMAN, Arkansas
SHERROD BROWN, Ohio MITCH McCONNELL, Kentucky
AMY KLOBUCHAR, Minnesota JOHN HOEVEN, North Dakota
MICHAEL F. BENNET, Colorado JONI ERNST, Iowa
KIRSTEN E. GILLIBRAND, New York CINDY HYDE-SMITH, Mississippi
TINA SMITH, Minnesota ROGER MARSHALL, Kansas
RICHARD J. DURBIN, Illinois TOMMY TUBERVILLE, Alabama
CORY BOOKER, New Jersey CHARLES GRASSLEY, Iowa
BEN RAY LUJAN, New Mexico JOHN THUNE, South Dakota
RAPHAEL WARNOCK, Georgia DEB FISCHER, Nebraska
MIKE BRAUN, Indiana
Joseph A. Shultz, Majority Staff Director
Mary Beth Schultz, Majority Chief Counsel
Jessica L. Williams, Chief Clerk
Fitzhugh Elder IV, Minority Staff Director
C O N T E N T S
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Wednesday, March 2, 2022
Page
Hearing:
Nominations of the Honorable Christy Goldsmith Romero, Ms.
Kristin N. Johnson, Mrs. Summer Kristine Mersinger, and Ms.
Caroline D. Pham............................................... 1
----------
STATEMENTS PRESENTED BY SENATORS
Stabenow, Hon. Debbie, U.S. Senator from the State of Michigan... 1
Boozman, Hon. John, U.S. Senator from the State of Arkansas...... 2
WITNESSES
Goldsmith Romero, Hon. Christy, of Virginia, Nominated to be a
Commissioner of the Commodity Futures Trading Commission....... 6
Johnson, Kristin N., of Michigan, Nominated to be a Commissioner
of the Commodity Futures Trading Commission.................... 7
Mersinger, Summer Kristine, of South Dakota, Nominated to be a
Commissioner of the Commodity Futures Trading Commission....... 9
Pham, Caroline D., of New York, Nominated to be a Commissioner of
the Commodity Futures Trading Commission....................... 11
----------
APPENDIX
Prepared Statements:
Goldsmith Romero, Hon. Christy............................... 26
Johnson, Kristin N........................................... 28
Mersinger, Summer Kristine................................... 31
Pham, Caroline D............................................. 34
Document(s) Submitted for the Record:
Stabenow, Hon. Debbie:
U.S. Cattlemen's Association, letter of support.............. 38
Undersigned organizations, letters of support................ 39
Warnock, Hon. Raphael:
Senator Jon Ossoff, letter of support........................ 41
Goldsmith Romero, Hon. Christy:
Committee questionnaire, Office of Government Ethics
Executive Branch Personnel Public Financial Disclosure
Report and 5-day letter filed by Goldsmith Romero, Hon.
Christy.................................................... 42-67
Johnson, Kristin N.:
Committee questionnaire, Office of Government Ethics
Executive Branch Personnel Public Financial Disclosure
Report and 5-day letter filed by Johnson, Kristin N........ 68-97
Mersinger, Summer Kristine:
Committee questionnaire, Office of Government Ethics
Executive Branch Personnel Public Financial Disclosure
Report and 5-day letter filed by Mersinger, Summer Kristine
Pham, Caroline D.:
Committee questionnaire, Office of Government Ethics
Executive Branch Personnel Public Financial Disclosure
Report and 5-day letter filed by Pham, Caroline D.
Question and Answer:
Goldsmith Romero, Hon. Christy:
Written response to questions from Hon. Debbie Stabenow...... 162
Written response to questions from Hon. John Boozman......... 163
Written response to questions from Hon. Sherrod Brown........ 164
Written response to questions from Hon. Amy Klobuchar........ 164
Written response to questions from Hon. Raphael Warnock...... 164
Written response to questions from Hon. John Hoeven.......... 165
Written response to questions from Hon. Roger Marshall....... 165
Written response to questions from Hon. Tommy Tuberville..... 166
Written response to questions from Hon. Charles Grassley..... 167
Johnson, Kristin N.:
Written response to questions from Hon. Debbie Stabenow...... 169
Written response to questions from Hon. John Boozman......... 170
Written response to questions from Hon. Sherrod Brown........ 171
Written response to questions from Hon. Amy Klobuchar........ 171
Written response to questions from Hon. Raphael Warnock...... 171
Written response to questions from Hon. John Hoeven.......... 172
Written response to questions from Hon. Roger Marshall....... 173
Written response to questions from Hon. Tommy Tuberville..... 173
Written response to questions from Hon. Charles Grassley..... 175
Mersinger, Summer Kristine:
Written response to questions from Hon. Debbie Stabenow...... 176
Written response to questions from Hon. John Boozman......... 177
Written response to questions from Hon. Sherrod Brown........ 178
Written response to questions from Hon. Amy Klobuchar........ 178
Written response to questions from Hon. Raphael Warnock...... 178
Written response to questions from Hon. John Hoeven.......... 179
Written response to questions from Hon. Roger Marshall....... 179
Written response to questions from Hon. Tommy Tuberville..... 180
Written response to questions from Hon. Charles Grassley..... 181
Pham, Caroline D.:
Written response to questions from Hon. Debbie Stabenow...... 183
Written response to questions from Hon. John Boozman......... 184
Written response to questions from Hon. Sherrod Brown........ 185
Written response to questions from Hon. Amy Klobuchar........ 185
Written response to questions from Hon. Raphael Warnock...... 185
Written response to questions from Hon. John Hoeven.......... 186
Written response to questions from Hon. Roger Marshall....... 186
Written response to questions from Hon. Tommy Tuberville..... 187
Written response to questions from Hon. Charles Grassley..... 188
NOMINATIONS OF THE HONORABLE
CHRISTY GOLDSMITH ROMERO, MS. KRISTIN N. JOHNSON, MRS. SUMMER KRISTINE
MERSINGER, AND MS. CAROLINE D. PHAM
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WEDNESDAY, MARCH 2, 2022
U.S. Senate,
Committee on Agriculture, Nutrition, and Forestry,
Washington, DC.
The Committee met, pursuant to notice, at 10 a.m., via
Webex and in room 216, Hart Senate Office Building, Hon. Debbie
Stabenow, Chairwoman of the Committee, presiding.
Present or submitting a statement: Senators Stabenow,
Brown, Bennet, Gillibrand, Booker, Warnock, Boozman, Hoeven,
Ernst, Marshall, Tuberville, Grassley, Thune, Fischer, and
Braun.
STATEMENT OF HON. DEBBIE STABENOW, U.S. SENATOR FROM THE STATE
OF MICHIGAN, CHAIRWOMAN, U.S. COMMITTEE ON AGRICULTURE,
NUTRITION, AND FORESTRY
Chairwoman Stabenow. It is my pleasure to call today's
hearing to order on the nomination of the Honorable Christy
Goldsmith Romero, Kristin Johnson, Summer Mersinger, and
Caroline Pham to serve as Commissioners of the Commodity
Futures Trading Commission (CFTC). Welcome to the nominees, and
I have to say, to begin, I cannot think of a better way to
start Women's History Month by celebrating these strong,
confident women.
It is a pleasure to have all of you here today and to have
your families with you.
The CFTC has gone far too long without its full complement
of commissioners. Today's hearing, for two Democrats and two
Republicans, is an important step toward getting this financial
watchdog back to its full capacity. It is critical that we
confirm these nominees without delay.
The invasion of Ukraine has led to price volatility in
wheat and other agricultural markets, and there are reports
that U.S. efforts to limit Russia's access to capital may be
undermined by the use of unregulated crypto markets. A fully
operational Commission will help to ensure that our
agricultural producers have the tools they need to manage these
and other price risks. We look forward to working with the
Commission to bring appropriate oversight for the trading of
digital assets.
These nominees are extremely qualified, and each would
bring a unique perspective to their work at the Commission,
making them well suited to address these new challenges.
Inspector General Goldsmith Romero has investigated financial
fraud, most recently as the Special Inspector General for the
Troubled Asset Relief Program, a position to which the Senate
confirmed her by voice vote.
Ms. Johnson is a professor and internationally recognized
expert in financial markets, including on fintech and risk
management. Ms. Mersinger worked in leadership roles at the
Commission and here in the Senate. Ms. Pham began her career at
the Commission and has significant experience implementing
financial market reforms in the private sector.
They are also, as I said, making history. The Committee is
reviewing the nomination of four women from both sides of the
aisle, two of them women of color, to our country's preeminent
financial regulator. I should say one of them, I guess Banking
might argue with that, but I think it is the premier.
Our financial markets must work for everybody, so it is
critical that our leaders bring different backgrounds and
experience to the important job of protecting our markets and
those who use them.
As we saw at our hearing on digital assets there is broad
bipartisan interest and industry support for greater oversight
of the digital asset marketplace. Making the financial system
more accessible to the average American must go hand in hand
with appropriate consumer protections.
As we think about Federal regulation for digital assets and
we think about what they should look like, we are going to lean
on the leadership and experience of the Commission, and I trust
that the CFTC can rise to the challenge. We must give the CFTC
additional resources if we are to give it more authority over
our digital assets. We cannot repeat the mistakes of Dodd-Frank
and give the CFTC more responsibility without an appropriate
increase in funding.
We also need to make sure our financial markets can respond
to the escalating risks posed by the climate crisis. The
derivatives markets will play an important role in the
transition to a carbon-neutral economy, whether to protect
against extreme weather events or help farmers generate income
from implementing climate-smart agricultural practices.
All four nominees have support from a broad range of
stakeholders across the financial and agricultural sectors, and
I would ask unanimous consent that a letter indicating that,
describing this support, be entered into the record. Without
objection, so ordered.
[The letters can be found on pages 38-41 in the appendix.]
Chairwoman Stabenow. With that I will now turn to my friend
and our Ranking Member, Senator Boozman, for his opening
comments.
STATEMENT OF HON. SENATOR JOHN BOOZMAN, U.S. SENATOR FROM THE
STATE OF ARKANSAS
Senator Boozman. Well thank you, Madam Chair, and I am
pleased to join you today in welcoming each of our nominees to
the Committee as we consider their nominations to be
Commissioners of the Commodity Futures Trading Commission. I
congratulate all of you on your nomination and your willingness
to serve our country. The four of you bring diverse experiences
and a broad range of knowledge that will add value to the
Commission.
It is certainly worth repeating that today's hearing is
historic in that not only are we considering four highly
qualified nominees but four highly qualified female nominees,
which is something we should all be very proud of. I commend
and congratulate all of you on this achievement.
If confirmed, each of our nominees will set the tone and
direction of a vital agency that regulates a wide range of
financial products that are essential tools used by end users
like farmers, ranchers, municipalities, and pension funds to
hedge commercial risk. Beyond legacy commodity contracts that
market participants have used for centuries to manage risk,
these markets have also grown to include derivative contracts
on interest rates, stock indexes, foreign currency, and even
digital assets like Bitcoin futures. The CFTC also has the
authority to bring enforcement actions in cases of fraud and
manipulation in commodity cash markets.
While digital assets and distributed ledger technology are
revolutionizing financial transactions and the way people
manage their money, questions remain as to the proper role
Federal regulators should play in encouraging further
innovation in digital assets while ensuring market participants
are protected. Our nominees will play a pivotal role as
Congress, with input from stakeholders, consumers, and
industry, navigate a path forward.
To each nominee, I look forward to hearing your goals and
your visions for what you hope to accomplish at CFTC should you
be confirmed, particularly as it pertains to engaging with
other financial regulators and providing guidance to Congress
regarding what, if any, expanded role regulators should have
over digital asset commodity spot markets as we debate the
guardrails that could be implemented.
Like any agency, I believe the CFTC functions best when it
is fully operational and with a full slate of commissioners. I
am glad we can hold this hearing today, and I look forward to
getting you all in place soon so that we can ensure that the
markets you regulate continue to operate effectively, and in a
fair and transparent manner.
With that I yield back.
Chairwoman Stabenow. Well thank you very much, and let me
now officially introduce each of our four nominees. First,
Christy Goldsmith Romero is the Special Inspector General for
the Troubled Asset Relief Program, where she leads an
independent office conducting investigations and audits of
Federal programs. She has served in this role since her Senate
confirmation in 2012.
Inspector General Goldsmith Romero previously worked at the
Securities and Exchange Commission, where she investigated
securities violations in the Division of Enforcement and served
as counsel to two SEC chairs. She is an adjunct professor at
the Georgetown Law Center and University of Virginia School of
Law, where she teaches courses on securities regulation,
cryptocurrency regulation, and Federal oversight.
Inspector General Goldsmith Romero received her
undergraduate degree from Old Dominion University and her law
degree from Brigham Young University.
Now I am going to turn to Senator Warnock to introduce our
next nominee.
Senator Warnock. Well thank you so very much, Chair
Stabenow. It is my pleasure to welcome a Georgian to the
Agriculture Committee today as a nominee to the Commodity
Futures Trading Commission. I should say that we have many
great colleges and universities in Georgia. In fact, I heard
that Senator Coach Tuberville will be here so I brought my
University of Georgia mug just for him.
Kristin Johnson is a professor at one of our other great
universities, Emory University School of Law in Atlanta,
Georgia. She has over a decade of experience teaching corporate
securities and banking law. In addition to her academic work,
Ms. Johnson has worked in the private sector. She has a
practical view of banking and securities law to complement her
academic expertise.
She brings both a theoretical framework grounded in
practical understanding. If confirmed, she will be useful at
the CFTC and to the Nation. We are very proud of her. She is a
proud Georgian.
Chair Stabenow, you will be happy to know that my
constituent also has Michigan ties.
Chairwoman Stabenow. I noticed that.
Senator Warnock. She is a proud graduate of the University
of Michigan Law School. Ms. Johnson, congratulations on your
nomination, your hard work across the years, and thank you for
being here today. Welcome.
Chairwoman Stabenow. Thank you so much. Now Senator Thune
will make an introduction.
Senator Thune. Thank you, Chair Stabenow and Ranking Member
Boozman, for holding this hearing. Thanks to all the nominees
for your willingness to serve. As Chair, you and Senator
Boozman have pointed out in your opening statements, this is a
critically important agency with a wide swath of jurisdiction
in areas that are critically important to our economy, and
obviously coming from an agricultural State we all recognize
the role that the CFTC plays in helping our farmers and
ranchers manage risk and having oversight over so many of the
issues that they deal with on a daily basis. Thank you all for
your willingness to serve.
It is my privilege today to introduce Summer Mersinger, who
has been nominated to serve as a Commissioner at the CFTC. I
have had the privilege of knowing Summer for more than 20
years. She grew up in Onida, South Dakota, where her family
continues to run a diversified row crop operation. She went on
to study political science at the University of Minnesota, and
after she graduated I got to know her when she moved to
Washington, DC, to work on my staff back in the U.S. House of
Representatives.
After stints on my campaign and in the private sector,
Summer then came with me to the Senate to serve as a member of
my staff, and while serving on my staff in the Senate and
starting a family she pursued a law degree, attending evening
classes at Catholic University's Columbia School of Law where
she received her law degree in 2007. She became my Deputy Chief
of Staff, General Counsel, before joining the Smith-Free Group,
where she worked on a range of issues in the private sector,
from cybersecurity to tax policy.
While serving on my staff, working full-time, raising kids,
and going to law school in the evening I think is great
evidence of the powerful work ethic that she brings to this
job.
In 2019, she joined then CFTC Chairman Tarbert's staff as
Director of Legislative and Intergovernmental Affairs and then
went on to become Commissioner Stump's Chief of Staff, a role
which she holds today.
All that you can read in her bio, and given her educational
background and experience it is clear that she is prepared for
this role today. I think it is important for members of the
Committee to know, as we consider her nomination, that she
approaches issues with an open mind. She is a critical thinker.
She is a problem solver. She is fair. She is honest. She is a
woman of integrity. The CFTC, and our U.S. Government, could be
so lucky as to have someone of her not only caliber but
character to serve in the government, and we are lucky that
people like her answer that call.
I know her husband, Pat, who is here today, and her four
children, Sienna, Sydney, Wyatt, and Drake, are all incredibly
proud of her, as I am, and I think all South Dakotans are as
well.
Summer, congratulations on your nomination, and Madam
Chair, I look forward to considering all these nominations and
to soon having a full Commission in place at the CFTC. Thank
you.
Chairwoman Stabenow. Thank you so much, Senator Thune, and
I could not agree more, so thank you very much.
Our final nominee is Caroline Pham, Managing Director at
Citi where she has held various senior roles, including as a
Global Head of Compliance, Deputy Head of Global Regulatory
Affairs, and Head of Market Structure for Strategic Initiatives
in Citi's Institutional Clients Group. She has also represented
Citi on the Executive Committee of the Chamber of Digital
Commerce.
Ms. Pham was a visiting fellow at the George Washington
University Center for Law, Economics, and Finance. Prior to
joining Citi, Ms. Pham served as Special Counsel and Policy
Advisor to former CFTC Commissioner Scott O'Malia. She received
her undergraduate degree from UCLA and her law degree from
George Washington University.
Thanks to each of you for joining us here today. I look
forward to discussing more your visions for the Commission.
If you would each rise we have two official questions that
we need to ask you.
First, Inspector General Goldsmith Romero, Ms. Johnson, Ms.
Mersinger, and Ms. Pham, two questions. First of all, do you
swear or affirm that the testimony you are about to provide is
the truth, the whole truth, and nothing but the truth, so help
you God?
Ms. Goldsmith Romero. I do.
Ms. Johnson. I do.
Ms. Mersinger. I do.
Ms. Pham. I do.
Chairwoman Stabenow. Thank you. Second, do you agree that,
if confirmed, you will appear before any duly constituted
committee of Congress if asked to appear?
Ms. Goldsmith Romero. I do.
Ms. Johnson. I do.
Ms. Mersinger. I do.
Ms. Pham. I do.
Chairwoman Stabenow. All right. Thank you very much. Thank
you all.
Your testimony will be made part of the record in its
entirety, and we will now begin with our five-minute opening
statements from each of you. We will start with Inspector
General Goldsmith Romero.
STATEMENT OF THE HONORABLE CHRISTY GOLDSMITH ROMERO, OF
VIRGINIA, NOMINATED TO BE A COMMISSIONER OF THE COMMODITY
FUTURES TRADING COMMISSION
Ms. Goldsmith Romero. Chairwoman Stabenow, Ranking Member
Boozman, members of the Committee, it is my honor to appear
before you today, and I am deeply grateful to President Biden
for nominating me to be a Commissioner at the Commodity Futures
Trading Commission.
I am pleased to recognize my wife, Adrianne, my three
daughters Chelsea, Brooke, and Julia, and my son-in-law Seth.
We are a close-knit family, and they are my foundation and my
joy. I also want to recognize my parents, and my in-laws, and
my siblings, who have all been very supportive of me.
I also have to recognize and thank everyone, past and
present, at my current office, SIGTARP. They are public
servants that are dedicated to making a difference.
I come from a military family who raised me to have a sense
of duty and service to others. My father joined the U.S. Navy
as a young man in the Philippines. He became a U.S. citizen and
served our country for 20 years. My brother, Scott, has served
in the U.S. Army Reserves for 34 years, and they have inspired
me in my 20 years of Federal service.
The CFTC's mission is to promote the integrity, resilience,
and vibrancy of U.S. derivatives markets through sound
regulation. This mission contributes to U.S. markets being the
strongest and safest in the world. Whether focused on hard
commodities like agriculture, energy, or metals, or on the
financial sector, the Commission plays a critical role in
ensuring that these markets work well. That starts with
agriculture--the farmers, ranchers, and producers that our
Nation depends on to put food on our tables and help drive our
economy. They need U.S. derivatives markets to work for risk
management and price discovery, and this requires the CFTC to
fulfill its mission, which is a mission that I take to heart.
I have spent my career helping protect our markets. At the
Securities and Exchange Commission, I worked to promote market
integrity and protect investors in the Enforcement Division. As
counsel to SEC Chairmen Cox and Schapiro, I helped them oversee
markets during a national crisis.
Through three administrations, I have served as the Special
Inspector General for the Troubled Asset Relief Program at
Treasury, helping our economy recover after the financial
crisis. With 465 criminal prosecutions, 25 civil enforcement
actions, 11.3 billion dollars recovered, and hundreds of
recommendations to improve government, SIGTARP helps safeguard
our markets and financial system, and it will forever have been
my privilege to have served as its leader. I am also an adjunct
law professor at the University of Virginia and Georgetown,
where I teach on securities and cryptocurrencies.
If confirmed, my highest priority would be to ensure that
these markets are working well, that they are open, fair, and
competitive. I would prioritize identifying and mitigating
risks to these markets, and I would promote a culture of
compliance coupled with strong enforcement. I will work to
protect markets and customers against fraud and manipulation,
just as I have done throughout my career.
As our markets evolve with digital assets and climate,
regulators must be thoughtful and deliberate. It is important
to learn the facts, listen to all sides, understand the
consequences of any action, and collaborate with other
regulators.
My parents instilled in me the values of listening and
respecting others. I will make it a priority to engage with end
users, and I am committed to working with you.
Serving my country is my way of giving back to a country
that has given my family so many opportunities. I have a broad
and deep experience in protecting our markets, and it would be
my honor and privilege to use that experience as a CFTC
Commissioner. I commit to do all that I can to promote the
integrity, resilience, and vibrancy of our markets so that they
continue to be the strongest and safest in the world.
Thank you for this honor.
[The prepared statement of Ms. Goldsmith Romero can be
found on page 26 in the appendix.]
Chairwoman Stabenow. Thank you very much. We will now hear
from Ms. Johnson.
STATEMENT OF KRISTIN N. JOHNSON, OF MICHIGAN, NOMINATED TO BE A
COMMISSIONER OF THE COMMODITY FUTURES TRADING COMMISSION
Ms. Johnson. Thank you, Chairwoman Stabenow, Ranking Member
Boozman, and other distinguished members of this Committee for
holding this hearing. I want to thank President Biden for
nominating me to serve as a CFTC Commissioner at this critical
time for global markets and our Nation. I also want to thank
Senator Warnock for his very generous introduction. Finally, I
would like to thank the Committee members and their staffs for
their assistance during this nomination process.
My family arrived in the Midwest in the early 1800's and
settled in a small town on the Wabash River. The started small
businesses and served as civil servants, legal advocates,
teachers, and nurses. They volunteered to serve our Nation in
times of war and peace. My sisters and I inherited this
commitment to public service. We were raised in faith, and
embraced values like hard work, honesty, and integrity, and we
enjoyed the sense of infinite possibilities that America
provides.
I developed an interest in finance as a student at
Georgetown University. After graduating, I worked as an analyst
at an investment bank, supporting investment portfolios for
universities and charitable endowments, public and corporate
pension plans, hospitals and other large institutions. I went
on to University of Michigan Law School, and there served as an
editor on the Michigan Law Review, I clerked for a Federal
court judge, and I practiced law in the New York and London
offices of a large law firm. Later, I served as Vice President
and Assistant General Counsel at one of the largest financial
institutions in the country.
Today I serve as the Asa Griggs Candler professor at Emory
University Law School. For many years my work has focused on
risk management oversight, understanding financial crises and
protecting the economy from these disruptive events. My current
work examines emerging technologies such as artificial
intelligence and blockchain technologies that facilitate the
creation of cryptocurrency trading platforms.
Our futures and derivatives markets are globally
preeminent. In the domestic economy, markets impact the lives
of many Americans, influencing the cost of energy resources
used to heat homes, fuel transport, cultivate crops, and
manufacture goods. It is critical that these markets work
effectively.
After the financial crisis of 2008, Congress adopted the
Dodd-Frank Act, expanding the CFTC's authority to implement
reforms that increase transparency and liquidity and mitigate
risks in previously unregulated swaps markets. While these are
important accomplishments, much work remains.
Markets increasingly face new challenges, including a
global health crisis, concerning geopolitical events, and cyber
threats. During crises, the CFTC's role in protecting market
integrity is even more critical, because many, including
farmers, ranchers, grain elevator operators, producers, and
distributors rely on derivatives markets to determine prices
and manage risk. If confirmed, I will support the CFTC in its
mission to ensure orderly trading and liquidity as well as
customer protection, fairness, and transparency in futures and
derivatives markets.
New technologies expand the financial market ecosystem,
promising to increase access to markets, enhance transparency
and efficiency, and reduce the time and cost needed to execute
transactions. These developments include platforms that operate
without centralized intermediaries, smart contracts, blockchain
technology, quantum and cloud computing, and automated trading,
among others. With a few quick taps, for example, retail
investors may quickly and easily download smartphone apps that
execute complex, leveraged, digital asset transactions.
Yet new products and platforms face growing concerns--data
breaches, Oceans 11 and Bonnie and Clyde style heists, and
cyberattacks that threaten to disrupt markets. In addition, in
these markets there may be low or no visibility, and
uncertainty regarding customer protections.
Public service is the highest calling. To that end, I will
maintain an open door. I look forward to visiting with market
participants to better understand their concerns. If confirmed,
I will offer my experience and expertise in service of ensuring
the CFTC's continued leadership in fostering responsible
innovation and open, fair, and competitive and financially
sound markets.
Before closing I wish to acknowledge the love and support
of my family and friends, and in particular my son, Jackson,
for his patience as I endeavor to be in service to others. I
also want to thank my parents. Their hard work and sacrifices
paved the way for me to be here today.
Thank you again for the honor to appear before you. I look
forward to your questions.
[The prepared statement of Ms. Johnson can be found on page
28 in the appendix.]
Chairwoman Stabenow. Thank you so very much. Ms. Mersinger.
STATEMENT OF SUMMER KRISTINE MERSINGER, OF SOUTH DAKOTA,
NOMINATED TO BE A COMMISSIONER OF THE COMMODITY FUTURES TRADING
COMMISSION
Ms. Mersinger. Chairwoman Stabenow, Ranking Member Boozman,
and distinguished members of this Committee, it is a true honor
to be here today and I am humbled by this opportunity to share
with you my background and experience as you consider my
nomination as a Commissioner at the Commodity Futures Trading
Commission. I want to say a special thank you to Senator Thune
for that wonderful intro. The work ethic and the integrity and
the desire to serve that you described I believe come from my
years of learning directly from you, so thank you.
With the start of Women's History Month, I cannot think of
a better way to celebrate the legacy of the many women who made
important contributions to this great nation than sitting here
at this table with these three impressive ladies. Christy,
Kristin, and Caroline, I have enjoyed every minute of this
journey with you. I already consider you friends and if we are
confirmed I know you will be exceptional colleagues.
I am also honored and grateful to have my family and
friends supporting me through this process. My husband,
Patrick, is here with me today. While some may say it takes a
village to raise children, I say it takes a Patrick. I am so
grateful for his love, his patience, and his endless support.
My four children are also here with me today. Sienna, Sydney,
Wyatt and Drake, I have two important messages for you: First,
I love you more than you will ever know, and second, I am sorry
for making you dress up today. I promise when you get home you
can change. To my family and friends watching from afar, thank
you for everything. I am incredibly blessed and my heart is
full.
I would like to take this opportunity to share with you my
background and experience which make me uniquely qualified to
serve as a Commissioner at the Commodity Futures Trading
Commission. I grew up in central South Dakota, where my dad
still farms the land, growing wheat, sunflowers, corn, and
soybeans. My parents started out working on a cattle ranch,
working to save enough money to build their own farm operation.
I was not exactly raised in a barn, but it was only a few yards
away from our house.
Agriculture is a part of my heritage and in my DNA. In the
late 1800's, my Eastern European ancestors homesteaded in the
county where I grew up. I can only imagine what my ancestors
must have felt looking out on the vast Dakota prairies,
venturing into a new frontier in search of the American Dream.
I am certain they were overwhelmed, but I also like to think
they were excited by the opportunity to create a legacy for
future generations.
My background on the farm is only a small part of my story.
After college, I spent over 15 years working on Capitol Hill
for a distinguished member of this Committee. My time on the
Hill included a crash course in financial markets and
regulations while managing these issues for the Senator during
the financial crisis of 2008.
Over the last years, I have had the good fortune of working
at the CFTC for two amazing members of the Commission. In my
role as the Director of the Office of Legislative and
Intergovernmental Affairs under former Chairman Heath Tarbert,
I was immersed in the Commodity Exchange Act, working in a
bipartisan manner with House and Senate Agriculture Committees
and staff to find common ground to reauthorize the agency. I
also spent time coordinating with our appropriators to
communicate the needs of the agency and work in a bipartisan,
bicameral effort to secure the agency's annual budget requests.
Most recently, I have had the honor of working for
Commissioner Dawn Stump. In this role, I have engaged in
detailed discussions with our enforcement team, had in-depth
briefings from our policy divisions, discussed important work
force matters, and worked in a collaborative manner with
Commission staff to reach compromises and agreements.
I also had the incredible opportunity of serving as the
Designated Federal Officer for the Agricultural Advisory
Committee. This advisory committee was critical at the height
of the pandemic when unique supply chain issues disrupted many
of our agricultural markets. The AAC was a way to communicate
with numerous stakeholders to hear real-time perspectives and
to share with those stakeholders the actions we were taking at
the CFTC to ensure markets continued to function in their role
as reliable price discovery and risk management tools.
Sitting here today, with this group of amazing women, I
like to think I am experiencing at least some small part of
what my ancestors felt so long ago. I believe the CFTC is
starting a journey into a new frontier, and I am excited by the
opportunity to navigate this new territory should I be
confirmed.
This new frontier will be fertile ground for new innovation
that will benefit our financial system and our economy as a
whole, but reaping those benefits also will require managing
risks and hazards as we plow new ground. Should I be confirmed,
I am ready to use my background and experience to do my part in
creating a legacy at the CFTC of fostering responsible
innovation, while assuring integrity and resilience in our
markets.
Thank you for this opportunity and I look forward to your
questions.
[The prepared statement of Ms. Mersinger can be found on
page 31 in the appendix.]
Chairwoman Stabenow. Thank you very much. Last but
certainly not least, Ms. Pham.
STATEMENT OF CAROLINE D. PHAM, OF NEW YORK, NOMINATED TO BE A
COMMISSIONER OF THE COMMODITY FUTURES TRADING COMMISSION
Ms. Pham. Chairwoman Stabenow, Ranking Member Boozman, and
distinguished members of the Committee, it is an honor to
appear before you today. I am humbled and grateful.
My family has made me who I am today. I want to thank my
father, who taught me civic duty and started my journey here
with my high school internship in the mayor's office. I want to
thank my mother, who sacrificed her career for her children and
told me to never let anyone hold me back. In America, I can do
anything if I work hard enough, even grow up to be somebody
like my grandfather, who was a Governor and a judge. I want to
thank my brothers, who always helped me get back up again when
life knocks you down, and most of all I want to thank my family
in the room, especially my daughter, Eleanor. I am a proud mama
and hi to the fifth-grade class of Pine Street School.
I would also like to thank my teachers, mentors, sponsors,
and friends who saw potential in me and the impact I could
make.
I would like to tell you my parents' story, because it
shows why serving my country is so personal to me. They were
saved on the last day of the Vietnam War, April 30, 1975, when
they were airlifted by helicopter, just after midnight, from
the roof of the U.S. Embassy by brave American diplomats and
troops who risked their lives to help them. On that day, Saigon
fell to the Communists. Even though my mother was pregnant, my
parents waited to leave because my father, an Army doctor and
chief of a military hospital ward, would not desert his
patients and his post. Duty first.
American troops made sure my parents were safely evacuated
to the United States. My parents were first on a cargo ship
with 3,000 other refugees, where they stayed on deck under the
sun and rain for one week before being taken to the
Philippines. Then at Wake Island for a month, my father
volunteered with the U.S. Navy and CDC doctors, even saving a
two-year-old's life. Then the US Air Force flew them to Camp
Pendleton where they waited for what was next.
Americans, from every part of the United States but
especially ag country, showed up for them with kindness,
generosity and open hearts. My mother's wish is for me to honor
their memory today. My parents first went to Elgin, North
Dakota, where Mrs. Elizabeth Beede, wife of North Dakota State
Senator Ralph Beede, warmly hosted them, then Oakland
University in Michigan. Next, in Needles, California, Mrs. Ann
Advocate and the church welcomed my family. Then to New Jersey.
Rural communities need doctors, and my family ended up in
Modesto, California, where I was born.
This story of my family, and the fact that I am here now,
shows why America is the greatest democracy of all. I want to
give back to our heroes in uniform and the kind-hearted folks
across this great nation who gave us a new life.
Although I live in New York City now, my roots are
important. Modesto's top ag products include milk, almonds,
chickens, cattle, peaches, tomatoes, and, of course, wine. When
I was growing up we owned orchards and I did 4-H, showing
horses at the county and State fair. Organizations like the
American Legion and our Rotary Club, where my father was
president, instilled in me good citizenship and strong
character and reputation. I was raised with values like
fairness, integrity, loyalty, service, and helping others.
Two of my guiding principles are hard work and life-long
learning. I was studying at GW Law during the 2008 financial
crisis and wanted to contribute in some way. I interned at the
U.S. Court of Federal Claims and in enforcement at the CFTC,
SEC, and the bank regulator, the OCC. It was then my privilege
to work at the CFTC during Dodd-Frank, with selfless public
servants dedicated to safeguarding our markets. The CFTC raised
me too, and it is part of my roots.
My career and extensive experience, including hands-on
implementation of regulatory reforms, has taken me around the
world and shown me that it is critical that global markets are
well-functioning and that there are clear rules of the road to
facilitate compliance, promote market integrity, and foster
innovation and growth. I am still amazed at the power of strong
leadership and in coming together to find common standards and
common solutions.
This is another inflection point where the world faces
immense challenges and the U.S., especially the CFTC, can build
or reshape global financial market structure. I know firsthand
the importance of a pragmatic approach and ensuring the
protection of Americans and businesses that depend on our
markets for risk management and price discovery.
I thought that being promoted to managing director was
going to be the highlight of my professional career. I now know
that sitting here before you is. If confirmed, I will work hard
to get the job done. Thank you.
[The prepared statement of Ms. Pham can be found on page 34
in the appendix.]
Chairwoman Stabenow. Thank you very much. We will now go to
a round of five-minute questions from each member, and I have a
couple of topics I would like to ask each of you about. The
first is actually a very simple yes or no, and then I would
like to do a followup. Starting with Inspector General
Goldsmith Romero, at this Committee's recent digital assets
hearing, all the witnesses advocated for greater Federal
oversight of the spot market for digital assets and stated the
CFTC is well positioned to regulate the market.
A simple question. Do you believe that today there is
sufficient regulatory oversight of the spot digital asset
market?
Ms. Goldsmith Romero. No, Chairwoman.
Chairwoman Stabenow. Thank you. Ms. Johnson?
Ms. Johnson. No, Chairwoman.
Ms. Mersinger. No, Chairman.
Ms. Pham. No, Chairwoman.
Chairwoman Stabenow. Thank you. We are starting from
agreement. This is good. Let me ask a followup. Speak about the
CFTC's positioning to regulate spot digital asset commodities.
Do you think it is well positioned to do that, and could you
speak to that a moment?
Ms. Goldsmith Romero. Absolutely.
Ms. Johnson. I would agree, yes.
Chairwoman Stabenow. Great.
Ms. Mersinger. I would agree as well.
Ms. Pham. Yes, Chairwoman.
Chairwoman Stabenow. Well, Senator Boozman, I think we have
got some work to do at the Commission, right? Great. Thank you
very much.
Let me now move to another really critical area of
tremendous risk in many, many ways, and that is the climate
crisis.
Chair Behnam has stated that climate change poses a major
threat to the U.S. financial system, and other financial
regulators have echoed that view. Do you agree, and if so, what
will you do to help address this risk, if confirmed? Let me
start again with Inspector General Goldsmith Romero.
Ms. Goldsmith Romero. Thank you, Chairwoman, for that very,
very important question. I do agree that there is a threat. I
think the CFTC's role is to first understand that threat,
understand the amount of risk, and to engage in that, and I
would work with the Chairman with that.
The other thing I wanted to point out is that the
derivatives market provide an opportunity to hedge against that
risk, particularly as we transition to a carbon-neutral
environment. These are the things I would focus on if I am
confirmed.
Chairwoman Stabenow. Ms. Johnson?
Ms. Johnson. Thank you so much, Chairwoman, for that
question. I would echo my fellow nominee's emphasis on the
CFTC's role in this context. The markets that the CFTC oversees
include derivatives that directly relate to these questions,
but also registrants and others. In this context, the
agricultural community we can imagine as well, who regularly
depend on derivatives to determine price and to manage and
mitigate risk.
There are a number of constituents that are deeply impacted
by severe weather events. The increased number of severe
weather events and the frequency of those events is certainly
of concern to all of them, and yes, I support Chair Behnam and
my fellow nominees, and would look into this, inviting
conversation from all constituents.
Chairwoman Stabenow. Thank you very much. Ms. Mersinger.
Ms. Mersinger. Thank you for the question. Climate risk is
one of the many risks that businesses need to prepare for, and
I believe the CFTC's markets actually serve as a tool in this
effort and certainly in managing the risk that comes from
extreme weather and climate, but also in managing transition
risk as we try to move to a net-zero economy. We already have
some existing contracts trading in this area, and if confirmed,
I look forward to working closely with Chairman Behnam as he
addresses this issue.
Chairwoman Stabenow. Thank you very much. Ms. Pham.
Ms. Pham. Chairwoman, it is a hard issue that needs to be
thoughtfully studied. This impacts so many important
stakeholders, from market participants to end users and up and
down the value chain. With that level of scale and complexity
there is always the question of this risk, and I believe in the
power of markets to provide solutions. There are opportunities
here for innovation and new risk management products, and I
would like to point out that the CFTC has been doing that since
day one.
Chairwoman Stabenow. Thank you. Finally a question for Ms.
Johnson on cybersecurity. We know that cyberattacks are
becoming much more commonplace, and we are certainly hearing
about this now in the context of what is happening
internationally, and pose clear risks to our financial markets
and our national security.
How do you think the CFTC can most effectively monitor for
cyber threats and keep them from disrupting our derivatives
markets?
Ms. Johnson. Thank you so much, Chairwoman Stabenow, for
that question. This is a critical issue for our time, and on
this particular day for our Nation and around the world. The
threat is real, and there is a certainty of need for
preparedness, preparedness on the part of the agency and its
ability to execute its mission and effectively oversee markets
and ensure market integrity and stability.
Therefore, we will continue to integrate 21st century
technology within the agency to ensure preparedness and system
safeguards of the agency's systems itself but also engage
continuously in communication and conversation with registrants
and others. In periods of extreme disruption or high
volatility, the CFTC is boots on the ground, the cop on the
beat, if you will, and prepared in many instances to assist
registrants with organizing resiliency and recovery programs.
Each has indicated already to the CFTC, in an amazing
conversation with the agency, about day one plans for instances
in which there are breaches or disruptions of service.
I would like to commit to continue in that endeavor and
support the Chair and the agency in ensuring its systems
preparedness as well as that of those operating in our markets.
Chairwoman Stabenow. Thank you very much. I will now turn
to Senator Boozman.
Senator Boozman. Thank you, Madam Chair. This is for the
whole panel. I have heard from several ag interests that there
is a perceived shift at the CFTC to become an agency which is
heavy on enforcement. While I support punishing bad actors, I
understand that enforcement continues to play a larger role at
the CFTC, even in situations where violations are minor,
unintentional, and could be easily corrected.
If confirmed, could you commit to advocating that the
Commission work with the market participants to proactively fix
issues when violations are inadvertent and largely immaterial,
and not automatically default to issuing fines and other
penalties? In other words, more of a helpful attitude versus a
gotcha attitude.
We will start with the IG that deals with these things all
the time.
Ms. Goldsmith Romero. Thank you, Ranking Member Boozman.
Yes, I would commit to that.
Senator Boozman. Very good.
Ms. Johnson. Thank you, Ranking Member Boozman. I would
echo my nominee's commitment but underscore that I strongly
believe in robust enforcement and can imagine balancing that
with ensuring or encouraging cultures of compliance at
registered entities subject to oversight.
Senator Boozman. Very good.
Ms. Mersinger. Yes, Senator Boozman, and I will always put
agriculture first, if confirmed.
Ms. Pham. I agree with my fellow nominees, Senator Boozman,
and I think it is important that we provide regulatory clarity
and guidance to our markets.
Senator Boozman. Very good. Again, this is another question
for the panel, and I would like for you to elaborate on it a
little bit. I think it is important.
It is estimated that Bitcoin and Ether, which have both
been determined to be commodities, make up about 60 percent of
the total aggregate value of cryptocurrency market cap. Beyond
these two digital assets, do you believe it makes sense for
CFTC to provide a list of guidance on which other digital
assets it considers to be commodities?
Let us start at the other end.
Ms. Pham. Senator, I appreciate the bipartisan and
thoughtful engagement and support from the Ag Committees on
this critical issue. There have to be clear rules of the road
to protect customers, and various markets cannot grow fairly
and responsibly without more clarity. I would suggest that that
is the approach that the Commission and the rest of the
regulators in the U.S. and around the world provide on this.
They are global markets, and it is important that the U.S. does
not miss an opportunity to lead here and support U.S.
businesses.
I welcome the direction of the Congress on this, and if
confirmed, will work with the Chairman, my fellow
commissioners, and the staff on tackling this. I will
faithfully uphold the CFTC's mandate and defend its
jurisdiction, if necessary.
Senator Boozman. Would you consider providing a list of--in
other words, determining the other entities besides Ether and
Bitcoin as to whether or not they are commodities versus
something else?
Ms. Pham. I think that providing a list can sometimes not
keep up with the pace of innovation in new products, but I will
point to the CFTC's method of self-certification, new
contracts, which I do think is well suited for new products.
Senator Boozman. Very good. Go ahead.
Ms. Mersinger. Thank you for that question, Senator
Boozman. As far as a list as to what is a commodity or what is
a security, I think we need to look beyond that, and we need to
look at the markets. When doing so, we need to figure out a way
to appropriately balance the many opportunities that these
assets bring with the risks as well, and certainly this is
something where we need to continue having discussions with not
only Federal regulators but also State regulators and industry.
We have to get this right, and certainly if confirmed, I look
forward to working on this at the agency.
Ms. Johnson. Thank you so much, Ranking Member, for that
question. I want to underscore that I am a firm believer in
responsible innovation, and I believe your analysis regarding
Bitcoin and Ether is as you have described. I am enthusiastic,
if confirmed, about the opportunity to work with the Chair and
my fellow commissioners as we set out to offer clear and
effective guidelines.
I am also thoughtful about the diversity of assets in this
particular asset class, and the nuances of the attributes in
this emerging asset class. I am mindful that we will need to
engage in something that is commonly utilized by the CFTC,
roundtables and conversations that bring constituents from the
marketplace and industry, as well as others to the table to
engage in discussions about balancing the interest in
supporting responsible innovation with customer protections,
transparency, and fairness in the market.
Ms. Goldsmith Romero. Thank you, Ranking Member Boozman,
for that. I think one of the things that Chair Behnam
recommended was this is something maybe Congress might want to
consider. I am concerned about providing a list and not being
able to keep up, and I think one of the issues that could be
helpful from a regulatory approach is providing clarity on how
that decision is made as to what is a digital asset security
versus a commodity.
I do want to say, this is an area where we have got to get
that balance right. I mean, the CFTC's mission is to both
promote market vibrancy but also to do it in a safe way that
promotes market integrity, and that is going to be very, very
important as you move forward.
Senator Boozman. Very good. Thank you, Madam Chair.
Chairwoman Stabenow. Thank you very much. Now Senator
Brown.
Senator Brown. Thank you, Madam Chair. What a panel and
what a Chair of this Committee. The world is beginning to
change.
Chairwoman Stabenow. It is about time.
Senator Brown. It is about time. Thanks to the four
nominees, and Professor Johnson, especially to you. I so
enjoyed our conversation yesterday. To hear the backgrounds and
the stories of all of you is just so inspiring, each in her own
way. Thank you.
You know that CFTC plays a critical role in policing
markets, rooting out fraud, promoting stable markets. CFTC
makes sure the financial system works for families and the
economy instead of becoming just an arena for risky bets and
Wall Street. We have seen too much of that in the regulatory
parts of our government, and this is a new day and the four of
you represent that, so thank you.
My first question is to Professor Johnson and Inspector
General Goldsmith Romero on cryptocurrency. Some people--and
there is interest through much of the regulatory structure in
this government--the SEC, the Federal Reserve, the OCC, the
FDIC, and there should be interest in cooperation among all of
you. Some people will say that digital assets represent
innovation, that we should not regulate because we want to lead
the world, and any regulation crimps innovation. I do not think
we have to look back far to see those words used. As, Professor
Johnson, you and I talked yesterday, for instance, about over-
the-counter derivatives. Do not regulate them. U.S. will lose
its competitive edge. We do not want to stop innovation. We
know how profoundly damaging to consumers and our economy that
was.
Professor Johnson, what do you think the CFTC's role should
be in protecting consumers in markets from the risks of digital
assets, and then the same question for you, Inspector General.
Professor Johnson.
Ms. Johnson. Thank you so much, Senator Brown, for that
question. I want to start where you left off, the families in
fragile financial circumstances, with limited resources on a
regular basis to cover the costs of housing, heating their
homes, fuel for their cars, daycare for their kids, food in
their refrigerators, and prescription drugs. I am thoughtful
about that particularly vulnerable group of Americans every
time I sit down to write about risk management oversight in
financial markets. I am thoughtful about them because the buck
stops there. When we make mistakes it is often they who pay the
price.
I would just emphasis a couple of points that you made,
Senator Brown, if I may. The first is it is imperative, in
light of how our regulatory architecture works in financial
markets, that we ensure collaboration among financial market
regulators. As you noted, the alphabet soup of financial market
regulators that my seven-year-old son will now even soon be
able to describe--the FDIC, the CFTC, the SEC, the OCC. We must
act in collaboration. This is a particularly great moment for
our Nation to appreciate that we are one country. We share an
economy and we share at least one, if not many, common goals--
the successful integrity and stability of our markets.
I would also just like to point out one person who we
talked about yesterday, whose mission resonates with me and
inspires me, former Chair Brooksley Born, who looked at the
credit derivatives market and simply asked the question, ``Is
this something that we should study in the context of
understanding how the market works and where the risks lie?'' I
would just echo that here, and underscore the necessity that we
do ensure the vibrancy of our markets. We are also especially
mindful about the most vulnerable market participants that are
engaged in those markets, in this context possibly retail
market participants.
Senator Brown. Inspector General, your comments?
Ms. Goldsmith Romero. Thank you, Chairman Brown. First of
all, regulation is not mutually exclusive of innovation, and we
have a situation here where although the CFTC has the authority
to police the spot markets, they do not regulate it and they do
not have visibility in it. As a longstanding Federal law
enforcement official I can tell you it is very hard to find
fraud if you do not have visibility, you do not have access.
I think it is absolutely appropriate to collaborate as much
as we can. I used to work at the SEC. I know many people there.
They are still my partner today, and I would collaborate, and I
think we can do this in the right way to protect customers as
best as we can, as much as we can. If Congress wants to
consider adding additional protections, including consumer
protections, customer protections, particularly for retail
customers, I think that would be helpful as well.
Senator Brown. Thank you, Inspector General. These
investigations, as you suggest, can be exceptionally complex.
They can take years to complete. It is important that CFTC
pursue these complex, difficult, hard cases. Sorry, the cliche,
it really is one step ahead of the sheriff. I mean, so many of
these people that want to scam the system, and some of them are
making hundreds of millions of dollars doing that, and they are
not maybe your typical scam artists but really they are. We
know what they did with OTC, with over-the-counter derivatives,
we know what many of them are trying to do now, and we really,
really need this Commission to really take this very seriously
and working with those other agencies.
I would add, Madam Chair, and then I conclude, that there
are three of us on this Committee that also sit on the Banking,
Housing, and Urban Affairs Committee--Senator Smith, Senator
Warnock, and I. I do not believe there are any Republicans that
are on both. It is important that there be cooperation.
Jurisdiction should not enter into this, jurisdictional
committee fights, nor should jurisdictional fights enter into
it among the alphabet agencies, if you will.
Thank you all for your willingness to serve.
Chairwoman Stabenow. Thank you so much, and, Senator Brown,
one of the things that causes me to be optimistic about us to
be able to really address this important area is the fact that
you are on this Committee and the fact that we do have a joint
desire to figure this out. Just as Dodd-Frank figured out how
the regulatory agencies can work together, I know we can do the
same thing.
Senator Brown. You and Senator Boozman have always been so
cooperative on so many things across jurisdictions and party
lines, so thank you both.
Chairwoman Stabenow. Well, thank you. I think we have an
opportunity to do something really important, so thank you.
Senator Tuberville.
Senator Tuberville. Thank you, Madam Chair. Congratulations
on your nominations, ladies. I appreciate you taking time to
appear before our Committee today and answer all of our
questions.
You know, the CFTC's most basic function is to oversee our
Nation's derivatives markets. America's farmers and ranchers
rely on these derivatives markets to hedge risk and protect
themselves from losses after a bad year. Our country's
agricultural industry is the envy of the world, and each of you
will play a vital role in ensuring it stays at the pinnacle.
As we learned at the Committee's most recent hearing, the
CFTC is playing an increasingly larger role in the regulation
of digital assets. If confirmed, each of you has a
responsibility to do your part as regulators to ensure the U.S.
continues to be the global leader in financial innovation. You
can do this by communicating clear rules of the road to market
participants and not regulating through enforcement.
This is a question for all of you. If you keep your answers
fairly short I would appreciate it. You know, I believe
regulations should be used in a targeted way to address market
failures. When you think broadly about the digital assets
arena, why do you think that CFTC would be well suited to
address market failures in this sector.
We will start down on this end, Ms. Romero.
Ms. Goldsmith Romero. Thank you, Senator. I do think the
CFTC is well positioned. They have been a leader and they have
done a nice job of balancing promoting innovation by allowing
some new derivative products while also trying to keep the
market free of fraud and manipulation. I also think there are a
large number of commodities in the spot market that would fall
under that police authority that the CFTC has.
Senator Tuberville. Thank you.
Ms. Johnson. Thank you so much, Senator, for that question.
I believe the CFTC is well suited because we have an
established track record of operating in similar spaces. That
track record includes skills and relationships developed over
time, engaging directly with the constituents in the energy and
agricultural communities as well as commercial users and end
users and financial markets. That is my thought. Thank you,
Senator.
Ms. Mersinger. Thank you, Senator. As you know, the
Commodity Futures Trading Commission is set up with principles-
based regulation, and the reason that is important is because
it does serve to foster innovation. In fact, that is in our
mission, and that is one of the reasons why the Commission be
well suited to oversee the crypto markets if Congress decides
that that is what they want to do. Thank you.
Senator Tuberville. Thank you.
Ms. Pham. Thank you. I will just go back to something I
mentioned before, which is that the CFTC has been doing this
from day one, and the CFTC's markets have stood the test of
time over and over again, through market failures and crises,
and it will do so in the future as well.
Senator Tuberville. Thank you. Ms. Mersinger, like me you
come from a rural State. I know you take a lot of pride in that
ag is the leading industry in your home of South Dakota, just
like it is in my State of Alabama. If confirmed, how would you
approach stakeholder engagement including ag community outreach
as a CFTC commissioner?
Ms. Mersinger. Thank you, Senator. I have had some
experience in this setting. As the Designated Federal Officer
for Agricultural Advisory Committee I stay in constant contact
with our agricultural stakeholders, reaching out to them,
learning more about how they are using the markets, whether or
not the markets are working, and I plan to continue doing that.
I will have a very open-door policy.
I also look forward to getting out and meeting farmers and
ranchers on their land, on their turf. While I am very familiar
with many of the Midwestern crops, I look forward to visiting
the Southern States to learn more about Southern agriculture
production. Thank you.
Senator Tuberville. We will be glad to have you.
Ms. Pham, you spent time at the CFTC as a senior staffer,
and from the powerful personal statement you shared today I
know that stakeholder outreach is near and dear to your heart.
How will you reach out to our Nation's ag community in your
role as a CFTC commissioner, if confirmed?
Ms. Pham. Thank you. First of all I love to travel, so I do
hope that I also get an invitation to come on out, and that
includes a football game too.
I will say that one of my favorite parts of the job when I
was at the Commission previously was meeting with our ag
producers and growers and our end users. It is a privilege to
hear from people who are in the real world and who are just
trying to run their businesses and grow jobs and the economy. I
look forward to that, and it is the same reason why I have
enjoyed meeting with clients over these past years as well.
Senator Tuberville. Thank all of you very much. Thank you,
Madam Chair.
Chairwoman Stabenow. Thank you very much. Senator Thune.
Senator Thune. Thank you, Madam Chair. In recent years
South Dakota's cattle producers have been deeply concerned
about market volatility and potential market manipulation. If
confirmed as commissioners, what would you do to protect the
viability of cattle and other agricultural markets while also
ensuring that hedging tools are available and priced correctly?
Ms. Mersinger, given your agricultural background, this is
a subject I think you know well. Let us start with you.
Ms. Mersinger. Thank you, Senator, and yes, as you
mentioned I do know this well and I am keenly aware of the
concerns in the cattle markets. I think the most important
thing here is transparency, and the best way to ensure that is
through constant communication, and that is with the producers,
the staff at the CFTC, and the exchanges as well. Because at
the end of the day, we need these markets to work in their role
as price-setting and risk management tools, and that is
something that, if confirmed, I look forward to continuing
working on.
Senator Thune. Other nominees, thoughts on that?
Ms. Johnson. Senator, thanks so much for that question. I
want to echo my fellow nominee's reflections. We have had lots
of time together to talk about some of these questions, and we
agree she is an expert, so thank you for that question.
I will be learning a lot about cattle pricing transparency
when I take on this new role, if I should be confirmed. I hope
to bring all of my expertise in the context that you mentioned,
ensuring transparency in pricing, ensuring that the markets
work for the market participants.
I also would just underscore that with the recent COVID
crisis and growing disruption of geopolitical events our
agricultural markets are critical and central to the success of
our economy. I am happy to support transparency and ensuring
markets work effectively.
Senator Thune. Anybody else?
Ms. Goldsmith Romero. Senator, I appreciate this is a very
serious issue. I watched the cattle hearing that this Committee
had. I am looking forward to learning more about it.
Transparency is vitally important in these derivative markets
for them to be able to work.
You also mentioned manipulation. I am very experienced in
investigating market manipulation and fraud. That is an
important area to keep these markets working, and I would bring
that experience to the Commission.
Senator Thune. Thanks.
Ms. Pham. Senator, I know this is an issue with a lot of
focus on it and there are a lot of issues impacting the cattle
industry. There was a slaughterhouse down a few miles from my
high school when I grew up. Transparency is foundational to
U.S. markets and our regulatory frameworks, so if confirmed, I
will work with your office in looking further into this.
Senator Thune. Great. Thank you, and I just would urge all
of you to keep this front and center. It is an issue which is
of great interest not only in farm country but I think too,
just in terms of the overall. In our economy, agriculture is
critical obviously to our national economy. I am a big believer
in free markets, but in order for free markets to work there
has got to be competition. There is a tremendous amount of
concentration of power, market power, within a handful of firms
that are processing the beef that is raised in this country.
Keep an eye on that, and I am sure we will be coming back to
that again at another time.
Just to followup on my first question, and I do not have a
lot of time, but I have seen reports that some cryptocurrency
firms are potentially interested in participating in
agricultural markets, and I am wondering what your thoughts are
on their participation in these traditional markets. Do you
believe that they should abide by the same rules and
regulations? Just if you can summarize your thoughts on that
quickly.
Ms. Goldsmith Romero. Yes. Thank you, Senator. CFTC has a
principles-based regulatory framework, and those principles are
really important. I do not believe we should be lowering the
bar on those. Otherwise we are not really going to be able to
keep market integrity while promoting responsible innovation. I
look forward to learning more on this issue and getting more
details and working to make sure we are not lowering the bar.
Ms. Johnson. Thanks so much for that question, Senator. I
think ensuring a level playing field has long been a commitment
for the CFTC in terms of oversight of markets, and I think your
question speaks directly to the necessity of ensuring that. If
confirmed, I commit to monitor and surveil and be prepared to
hear from constituents about their concerns regarding whether
or not there is a level playing field.
Ms. Mersinger. Thank you. I would echo my fellow nominees
and just add that there is risk in having two sets of rules.
Ms. Pham. Senator, I believe that markets work best when
there are clear and simple rules with common standards. Any
changes to market structure need to be careful and thoughtful
to avoid market disruption and unintended consequences.
Senator Thune. All right. Thank you. Thank you, Madam
Chair.
Chairwoman Stabenow. Thank you very much. Senator Braun.
Senator Braun. Thank you, Madam Chair. Being from Indiana,
forestry, growing trees, lumber business in general is
probably, when you take all the downstream impact from it, is
as large as row crops would be. Mostly we produce hardwoods.
The lumber futures markets, of course, more associated with
2x4s and such that would be softwood products. Those markets
are used sometimes as a hedge, a way.
There has been so much volatility with all the demand that
was thrown into the system by what we did here to try to get us
through COVID. I am not sure when we are going to get back to
something that is more of a normal pattern. It did engage
several times in the futures market where there were lock
limits. In other words, those are designed to put a brake on
volatile trading, but when it happens that often it begs the
question, are they in the right place? Do you need to adjust
them?
I would like each witness to actually comment about, is
that something where you should intercede in times like we have
just gone through, and does this particular market look like it
needs something done more long-term so that you do not have
markets frozen up in a way that it makes liquidity difficult
and people to maneuver accordingly?
Start here on this end.
Ms. Goldsmith Romero. Thank you, Senator Braun. My highest
priority, if confirmed, would be to make sure these derivatives
markets are working, that they are open and fair and
transparent and they allow the hedging of risk that your
constituents need. I think part of it is really monitoring and
conducting surveillance at the CFTC into these markets to
understand what exactly is going on, being able to look at the
trading activity, being in communication with market
participants as well as the SROs. Then it is also to look to
see if there is any kind of manipulation, anyone trying to take
advantage of the market during times of volatility, which can
sometimes happen.
Those will all be things that I would be looking at, if
confirmed, and I am happy to get more details about this and
talk with you and your office further.
Ms. Johnson. Thank you so much for that question, Senator.
It is a very thoughtful question that really requires us to be
engaged in attempting to understand the market well. Your
question demonstrates that the critical pieces of oversight, or
pieces to the oversight puzzle that the CFTC maneuvers.
I would note that in moments of increased volatility in
markets or disruption the CFTC typically engages in heightened
surveillance, monitoring more closely, on the phone, you know,
folks on the phone line, to ensure that they have a clear
picture, they have great visibility into markets, seeking
superior and real-time data to ensure that if there is
activity, misconduct or inappropriate trading activity, that
that is seen to right away. It is imperative to see the
downstream effects on counterparties and to think carefully
about whether, as you describe, markets are working
effectively.
I can commit, if confirmed, to certainly being engaged in
careful monitoring and ensuring proper oversight.
Ms. Mersinger. Thank you, Senator Braun. What I will say is
I was at the CFTC during the pandemic when we were seeing these
record volatilities, and I was aware of the number of days that
they had limit down days, and it was definitely a concern,
something that we monitored very closely. I can tell you that
there is staff at the CFTC that pay very close attention to
this, keep in touch with the stakeholders and the exchanges, to
make sure the markets function. Certainly, if confirmed, I
would be happy to talk to those experts at the Commission and
report back to your office any information I can provide as to
how the lumber markets are functioning at this time.
Ms. Pham. Senator, in addition to what my fellow nominees
have stated, you know, the way how limits are set is an
important issue, and I think the CFTC, with its different
processes around how limits are set, and also with the
exchanges, the importance of public engagement throughout that
process is something that definitely should be upheld and is
something that, if confirmed, I look forward to working with
the Chairman and others on.
Senator Braun. Thank you all.
Chairwoman Stabenow. Thank you very much. I believe we have
Senator Hoeven with us online. Senator Hoeven? Senator Hoeven,
are you with us?
Senator Hoeven. I am sorry. I thought I had unmuted. Maybe
it got muted. Can you hear me now?
Chairwoman Stabenow. Yes. Every one of us does that at
least once every day, so welcome to the club.
Senator Hoeven. I know. Exactly. Thank you, Madam Chair,
and let me start with a question for all the witnesses.
Essentially, your subcommittee put out a report, ``Managing
Climate Risk in the U.S. Financial System,'' and I want to get
your response in regard to that.
In North Dakota we produce 1.1 million barrels of oil a
day. We produce huge amounts of natural gas. We have coal-fired
electricity. I would like each of you to respond on whether you
think there should be preferences for one commodity fuel type
over another, in terms of this climate risk report.
Ms. Pham. Senator, thank you, and North Dakota has a
special place in the hearts of my family, as I said in my
statement.
You know, climate is a hard issue that needs to be
thoughtfully studied, and I believe in the power of the markets
to provide solutions here, and there are opportunities to have
new products to deal with the physical and transition risk, so
thank you.
Ms. Mersinger. Senator, just to echo what my fellow nominee
said, I think that it is important that our work at the CFTC
remains neutral as to the commodity, that we are making sure
that these markets function regardless of the underlying asset.
Ms. Johnson. Thank you so much, Senator, for that question.
I believe that the CFTC has a long history of even-handed
engagement in the context of markets, and I would imagine that
tradition should continue. I appreciate and understand your
question and agree that there should be no preferences.
Ms. Goldsmith Romero. Thank you, Senator Hoeven. The
derivatives markets are incredibly important in the energy
sector to help manage that risk. As we move forward, I think
the CFTC's role is just to really try to engage and understand
that risk, and to be fully engaged with stakeholders, to listen
to all sides, and look at the facts. If confirmed, that is what
I would do.
Senator Hoeven. Ms. Mersinger, I understand that you worked
with Senator Thune for quite a while as a member of his staff.
That is great. You certainly understand agriculture in our part
of the world. Tell me, you know, what can CFTC do that really
is going to help our farmers and ranchers manage their risk? I
mean, it is a hard thing to do. What can the CFTC do, in your
opinion, to really make a difference for them?
Ms. Mersinger. Thank you, Senator Hoeven, and I will say
that I have a number of family members in North Dakota, and I
enjoyed many long car trips up north as a child.
Senator Hoeven. Yes, we love South Dakota. Yes, we love our
neighbor State.
Ms. Mersinger. As far as, you know, how we work with
America's farmers and ranchers to help them hedge risk and use
the CFTC markets, it is important to note that that is where
our markets started, and the idea was to ensure that farmers
and ranchers were able to have adequate price discovery in
their markets and also the tools to hedge their risk. We should
never get away from that, and we need to always be engaged with
those stakeholders to ensure that those markets are working
that way.
The other thing I would add is we do have an Office of
Education and Outreach, and I think that we could use that
office to better engage with the farmers and ranchers to help
them understand these markets and how they can be useful.
Senator Hoeven. Thank you. Ms. Romero, just a wrap-up
question here. Address cryptocurrency and how we are going to
regulate that and give consumers some knowledge of how it
works. I mean, it is just incredibly complicated. I think
people are really scratching their heads. What can CFTC do to
really help in that realm?
Ms. Goldsmith Romero. Thank you, Senator. I appreciate
that. I think a lot of people are getting confused by this.
There has been this explosive growth, particularly in the
retail market, where you have people who are buying crypto on a
phone app, who may not understand there is a lack of customer
protections, particularly if they are doing a transaction side
by side with another transaction that does have the customer
protections.
I think the CFTC should continue to be a leader. I think
they should help do the best they can to keep the market as
safe as possible. They do have authority to police the spot
market, but they do have limited visibility, and I think this
is an area where Congress could help.
I do think we have to balance the mission--this is what I
will be grounded in, if I am confirmed--of promoting part of
the mission to promote vibrant markets while also keeping them
safe and doing it in a way that promotes market integrity.
Senator Hoeven. Thank you. Thank you to all the witnesses,
and thank you to you, Madam Chair.
Chairwoman Stabenow. Thank you so much. I believe we do not
have other Senators wishing to ask questions at the moment, so
let me thank you again for being here today. Again, I am
excited about the quality of the four nominees in front of us.
We will be working to move your nominations forward as quickly
as possible.
This concludes today's hearing. The record will remain open
until tomorrow at 5 p.m. for members to submit additional
questions or statements. The hearing is adjourned.
[Whereupon, at 11:23 a.m., the Committee was adjourned.]
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