In what he said was his last speech as president of the Futures Industry Association, John Damgard was optimistic that Republicans would dominate both the Senate and the House in the next election, but not that they would be able to undo any of the provisions of the Dodd-Frank legislation to which they object.
Damgard told the Union League Club of Chicago that he expects the House to remain Republican and even gain a few more seats, and that the Senate will likely pick up four to six Republican seats.
“The recent redistricting has guaranteed Republicans control of the House for the next 10 years,” he said. Odds are stacked against the Democrats, as super PACs are focused on supporting Republican House members, and the Republicans have stymied the Democrats with the Supercommittee, he added.
No legislation will pass in Washington this year, Damgard predicted. President Obama just released his proposed budget; however, “budgets in an election year are generally dead on arrival,” Damgard said.
The budget takes direct payment away from farmers, who will oppose it, he said. However, although farmers are generally doing very well, they are not the political force they once were.
“Cotton is not king anymore,” he said. “Forget peanuts. Sugar is still there,” he said, but the Agricultural Committee is now focused on the financial services industry, in particular Chicago and the New York firms that trade Ag futures.
Any bill to revise a provision of Dodd-Frank “is not going anywhere,” Damgard said.
The House Agriculture Committee has approved six bills intended to modify some provisions of the Dodd-Frank Act related to derivatives. The bills have cleared the House Financial Services Committee but have not yet been approved by the Senate. Dodd-Frank passed without any Republicans supporting it; even if a revision were somehow to pass both the House and the Senate, Obama is likely to veto any version of that bill if re-elected.
Damgard had some kind words for Gary Gensler, the Chairman of the CFTC, who, he said, “really understands the markets.” But his long history with Goldman Sachs and as one of Jon Corzine’s former lieutenants will continue to haunt him, Damgard said. “I support the fact that Gensler stepped back, but it won’t help him in the long run,” he said.
Since November, when Gensler appointed Jill Sommers as the senior CFTC commissioner in charge of the investigation into MF Global, she has been the public face of the agency on this issue. But Gensler has resisted calls from Republicans to have her lead an independent effort to analyze the lessons learned. Damgard noted that the Financial Stability Oversight Council, which is chaired by Treasury Secretary Tim Geithner, has launched a review of what changes are necessary to strengthen customer protections, and he commented that this effectively cuts Sommers out of that process.
Damgard began his career in the industry as deputy assistant secretary at the Department of Agriculture in 1972, where he was the “point man” for the creation of the CFTC. He said he is particularly proud that he was responsible for the language that says the CFTC is under “exclusive Federal jurisdiction,” he said, which was intended to keep state securities commissioners at bay. It would have been impossible for the CFTC to deal with being regulated at the state as well as the Federal level, he added.
Damgard’s replacement at the FIA, Walter Lukken, is an ideal choice for the job, he said. Lukken has a master’s degree in business as well as a law degree, and served as counsel for five years on the staff of the Senate Agriculture Committee under Chairman Richard Lugar (R-IN).
After 30 years on the job, Damgard is ready to let someone else step in as FIA head. He will remain as a special advisor to the group, but he will also devote some time to his favorite hobby (after golf) – flying his collection of old airplanes.