In the absence of a quorum, the commissioner is hoping to jolt the nomination process by leaving before her term is up.
Sharon Y. Bowen, CFTC commissioner
Calling it “a bittersweet decision,” CFTC Commissioner Sharon Y. Bowen, one of only two members of what’s supposed to be a five-member body, announced last week that she will be leaving her post before her term is up as a way to hasten the process for filling commission vacancies.
“My hope is thus that by leaving early, I can inspire the key decision-makers to confirm four nominees as soon as possible,” Bowen said in her closing statement for the Market Risk Advisory Committee (MRAC), for which she served as a sponsor.
At the MRAC meeting on June 20, Bowen announced her departure shortly after pointing out that being MRAC’s sponsor is “one of the many joys” she has had via the CFTC. “As the main cop on the beat for the complex and ubiquitous U.S. derivatives markets, the work of this agency is essential to the supporting the safety and soundness of our economy,” she said.
The work yet to be done by MRAC is what compelled Bowen, a Democratic appointee, to take action, she said.
“It is because of the high value that I place on the work that we do here, that today I am announcing my intention that I will leave the Commission within the next few months, or perhaps sooner if another nominee is confirmed,” Bowen said. The announcement also meant that last week’s MRAC meeting would be her last as its sponsor.
“Why am I doing this? The answer is simple: because, since the departure of former Chairman [Timothy] Massad, the work of this agency has been hampered by only having a two-person Commission when we should be a five-person Commission,” Bowen said. “In fact, we have not been a five-person Commission since the departure of Commissioner [Scott] O’Malia in August 2014.”
Last month, the Trump Team announced that former fund manager Brian D. Quintenz of Ohio has been nominated a second time to be a CFTC commissioner. The White House has also put forth Dawn Stump who has worked on the U.S. Senate Agriculture Committee to be a commissioner. Their nominations are waiting as the administration considers potential commissioners from the Democratic side of the aisle.
With only two commissioners now, the routine business of the CFTC has become difficult, and the deliberation of “important policy decisions almost impossible,” Bowen said.
“Without a full complement of commissioners to consider the far-reaching implications of our decisions, we are frozen in place while the markets we regulate are moving faster every day,” Bowen said. “This fact is intolerable to me. I came here to protect investors, by supporting prudent collateralization, promoting robust transparency, and ensuring vigorous enforcement in the derivatives markets; and I intend to continue to do all in my power to reach that goal.”
While Bowen said that she would express her admiration for the agency “and its superb leader — Acting Chairman [J. Christopher “Chris”] Giancarlo” later, he heaped praise upon her and said their working relationship was one of “mutual respect” and rare cooperation for Washington.
“I commend Sharon on her tenure as a Commissioner,” Giancarlo said in a prepared statement. “She has brought significant experience and a clear and consistent voice to fulfilling the mission of the CFTC. … Despite functioning with only two commissioners, we have managed to be very productive, launching initiatives such as LabCFTC and Project KISS to make the CFTC a more efficient and effective regulator for the modern markets.”
Bowen, who was the first African-American woman to be appointed a CFTC commissioner, was sworn in on June 9, 2014 for a five-year term.
Her appointment was not without controversy because of her tenure as the Acting Chair of the board of directors of the Securities Investor Protection Corp. (SIPC). The Senate confirmed and Obama appointed Bowen to be SIPC vice chair on February 12, 2010. She later became acting chair in March 2012.
Her time at the SIPC spurred protest from U.S. Sen. David Vitter (R-La.) who in 2014 spoke against her nomination because of the SIPC’s decision to sidestep compensating victims of the R. Allen Stanford $7 billion Ponzi scheme.
“Sharon Bowen doesn’t deserve any promotion. Instead of safeguarding consumers — her job as Acting Chair of SIPC — she’s fought to safeguard Wall Street money. She refused to take appropriate action to protect victims of the Stanford Ponzi scheme,” Vitter said in June 2014. “The Stanford victims need some justice. They need to see that we’re fighting for them — not Wall Street.”
From the left, U.S. Sen. Bernie Sanders (I-Vt.), (and later candidate for the Democratic presidential nomination in 2016), was vocal in his opposition to Bowen.
“We need regulators who will have the courage to stop the largest Wall Street banks in this country from driving up oil prices in the energy futures market,” Sanders said in 2014. “After reviewing her record and those of two other nominees, I am afraid that none of them will make sure that the price of gasoline and heating oil is based on supply and demand and not Wall Street greed.”
Sen. Bernie Sanders voted against Bowen and opposed Mossad and Giancarlo’s confirmation.
Not all senators opposed Bowen, though as U.S. Sen. Debbie Stabenow (D-MI), at the time the chairwoman of the U.S. Senate Committee on Agriculture, Nutrition and Forestry, congratulated Bowen for her Senate confirmation.
Bowen’s legacy may be her work with MRAC whose two-fold mandate is to hold public meetings and submit reports about clearinghouses, exchanges, intermediaries, market makers, end-users and to help the regulator identify “the impact and implications of an evolving market structure and movement of risk across clearinghouses, intermediaries, market makers and end-users,” according to the CFTC.
MRAC has taken on several market risk and market structure issues such as “cybersecurity, market liquidity, portfolio compression, and inter-regulatory cooperation in central counterparty (CCP) resolution,” Bowen added. “And of course, the committee has spent a lot of time considering multiple aspects of CCP risk management, as typified by the outstanding set of recommendations presented at our November 2016 meeting. There is no doubt that MRAC has left an indelible impression on our markets.”
Before her time at the CFTC, Bowen was a partner in the New York office of Latham & Watkins LLP, officials say. Bowen joined Latham as a senior corporate associate in 1988 and became a partner January 1991. Her work as a lawyer included corporate, finance and securities transactions for large global corporations and financial institutions. She was involved in mergers and acquisitions, private equity, securities offerings, strategic alliances, corporate restructurings, leveraged finance, securitizations, distressed debt and asset acquisitions and venture capital financings.
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