ISDA v. CFTC: How A Judge Abused His Power For Wall Street

Inventing "Unambiguous" Language By Falsifying CFTC Policy

To establish that the statute "unambiguously" required a two-step regulatory process, Wilkins injects a red herring that stinks to high heaven. He writes:

The Commission does not argue--nor could it--that this section standing alone strips the agency of any discretion not to set position limits if it would be unnecessary to do so.  In fact, the statute expressly directs the agency to set position limits "from time to time."  

Again, Wilkins is playing with words to create a false impression. The CFTC chooses to exempt certain contracts because the possibility of market manipulation or market distortion does not present itself. In that sense, it does establish "necessity" prior to setting each and every position limit. You don't need to prevent or deter something that is not possible. For instance, the CFTC determined that the MGEX Index  Contracts should be considered exempt from position limits because "cash-settled index contracts are not subject to potential market manipulation or creation of market disruption in the way that physical-delivery contracts might be."

That's very different from Wilkins' false assertion, that the CFTC must first prove that market manipulations are distorting the market before the agency can ever take action to prevent and deter such manipulations.

It's hard to imagine a more clear-cut abuse of judicial power than Wilkins' response to the amicus briefs of senators and congressmen who said that they wrote the law and the CFTC is enforcing the law as they intended. "Given the fundamental ambiguities in the statute," Wilkins writes, "the Court is not persuaded by their arguments." 

There is not a shred of integrity or intellectual honesty in this decision. 

Why would an Obama appointee, a Harvard law grad, abuse his position so shamelessly? We don't know for sure, but given the billions of dollars in profits available to hedge funds and banks who can continue cornering the markets, it's not hard to venture a guess.

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If want an education in how different commodity markets operate, and how they are abused, there is no better place to go than to reports prepared by Carl Levin's Permanent Subcommittee on Investigations. You should read about excessive speculation in the natural gas markets (don't miss the Appendix), in the oil markets, and in the wheat markets. Something a bit more technical, but still enlightening is Chapter III of the UNCTAD Report on the Financial Crisis. No one can honestly read those reports and deny that the necessity for position limits is well established.

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