The Obama administration is vetting a top staff member of US Senate majority leader Harry Reid’s office for nomination to the US futures regulator, signalling a change of guard at a crucial time in the progress of financial regulation under the Dodd-Frank act.
Mark Wetjen, one of Mr Reid’s key figures in helping to produce the Dodd-Frank act, is undergoing background checks by the White House, a routine process ahead of the nomination of top government employees, people familiar with the matter said.
He is seen as the front-runner to replace Michael Dunn, a Democratic commissioner on the Commodity Futures Trading Commission (CFTC), who is retiring. The choice of Mr Dunn’s replacement is being watched more closely than usual because it comes as the CFTC is struggling to produce detailed rules designed to prescribe in detail how traders, banks, brokers, exchanges and clearing houses should comply with Dodd-Frank.
The legislation sets in motion sweeping reforms of the over-the-counter derivatives makets. The reforms include pushing such financial instruments onto exchanges and other types of trading platform, and insisting that as many as possible be processed through clearing houses to safeguard the financial system against the effects of another big default. Mr Dunn has been a moderate on the five-member commission, sometimes sympathetic to Republicans on key issues such as whether the US should impose position limits on the commodity derivatives markets, one of the most controversial issues on the CFTC’s agenda.
In January, Mr Dunn voted to allow the CFTC to proceed with a proposal to look at position limits, but went public with “serious reservations” about it, saying that “forging ahead on a position limits regime for political expediency is not the course of action that . . . promotes the health and integrity of the futures industry in the US”.
Mr Wetjen is a lawyer who practised in Mr Reid’s state of Nevada and joined the leader’s office in 2005. While not a derivatives expert, he was heavily involved in advising on Dodd-Frank. Colleagues in the Senate said he would be a good choice. “He’s a really smart, thoughtful guy,” said one.
The White House and Mr Wetjen both declined to comment.
Senior Republican aides said they would examine his candidature like that of any other nominee.
The position requires Senate confirmation, which has blocked a host of Obama administration choices, but Mr Wetjen’s background in Congress is likely to prove helpful at securing confirmation.