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

Of course, these opinions reflect the GOP agenda, which states that there is no evidence of excessive speculation, and that any type of regulation will cause extraordinary harm, and completely disregards the actions by the CFTC, pursuant to specific statutory obligations, to prevent any such harm.

Wilkins selectively quotes from GOP members, whom he never identifies as Republican, while ignoring the record the legal record that refutes such claims.

Falsifying Legislative Intent

So, though Wilkins cites a 1935 "Explanation of the Bill," to establish that the text was "unambiguous," he disregards the summary of Dodd-Frank, drafted by the Congressional Research Service, which states:

(Sec. 737) Directs the CFTC to establish position limits on: (1) trading or positions held by any group or class of traders; and (2) positions (other than bona fide hedge positions) that may be held by any person with respect to either contracts of sale for future delivery, or options on contracts or commodities traded on or subject to the rules of a designated contract market.

And when you read the statute introduced by Levin in 2009 and passed by Congress in 2010, it's quite clear that the CFTC must enact position limits, not consider whether position limits are necessary and only then decide what position limits should be enacted. Every law student knows the meaning of the verb "shall" in a legal document. Shall is a command that something must be done. You shall observe the traffic laws. You shall pay your mortgage on time. And when  the statute said CFTC shall impose position limits, everyone knew what it meant. 

Ignoring The Plain Meaning of The Text

Wilkins' most transparently egregious stunt was to ignore the way new statutes added under Dodd-Frank modified the meaning of Section 6a(a)(1). Here's the language:

 6a(a)(2)   [T]he Commission, within ___days after the date of the enactment of this paragraph, shall issue a proposed rule, and within ___ days after issuance of such proposed rule shall adopt a final rule, after notice and an opportunity for public comment, to establish limits on the amount of positions that may be held by any person with respect to contracts of sale for future delivery or with respect to options on such contracts or commodities traded on or subject to the rules of a contract market or derivatives transaction execution facility, or on an electronic trading facility with respect to a significant price discovery contract.

        '6a(a)(3) In establishing the limits required in paragraph (2), the Commission shall set limits--

            '(A) on the number of positions that may be held by any person for the spot month, each other month, and the aggregate number of positions that may be held by any person for all months; and

            '(B) to the maximum extent practicable, in its discretion--

                '(i) to diminish, eliminate, or prevent excessive speculation;

                '(ii) to deter and prevent market manipulation, squeezes, and corners;

                '(iii) to ensure sufficient market liquidity; and

                '(iv) to ensure that the price discovery function of the underlying cash market is not distorted or disrupted.

Wilkins simply ignores the mandatory language of the new statute. And any second-year law student would see right away that the new language--stating that the CFTC shall set position limits to the maximum extent practicable to deter and prevent market manipulation, squeezes, and corners --is a brand new legal requirement, something clearly above and beyond what existed prior to the passage of Dodd-Frank. You don't need to demonstrate that speculation is "excessive" in order to deter and prevent market manipulations. 

But Wilkins disregarded that language altogether, or rather, he labled all of the Dodd-Frank language "ambiguous" and therefore virtually irrelevant.

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