Oil Speculators: Bullish on Ex-Lobbyist CFTC Nominee?

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Flynn, a vice president at PFGBest, a futures brokerage, says he doesn't necessarily buy the notion that O'Malia's nomination caused a rally, but he describes it as "an interesting take on…interesting market movements."

But if the oil market is bullish on O'Malia, it has good reason to be. In the past, he has lobbied against regulatory measures concerning the energy sector—a strong indication that he may be an ally of speculators hoping to keep government meddling at a minimum. As David Corn and I reported recently, from 2001 to 2003 O'Malia was the director of federal legislative affairs for Mirant, an Atlanta-based energy company accused of engaging in Enron-style abuses, including manipulating electricity prices in California and contributing to a statewide energy crisis. At Mirant, O'Malia was registered to lobby for the repeal of the Public Utility Holding Company Act, a law intended to curb speculative investments by energy, natural gas, and water utilities. (PUHCA opponents eventually succeeded in getting the law replaced by a weaker regulatory regime.) He was also signed up to lobby against a bill that would have expanded the CFTC's authority to police energy derivatives. (The legislation was ultimately defeated.)

While market watchers are clearly taking notice of O'Malia's regulatory track record, the same can't be said of the Senate agriculture committee, which is in charge of reviewing his nomination. During his confirmation hearing last week, O'Malia—who spoke of his commitment to strengthening market oversight and exposing risky trading practices—wasn't asked a single question about his deregulatory lobbying efforts. Such a failure of vetting would be considered irresponsible on Wall Street. It's called due diligence.

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