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All you need is alpha

Published in Automated Trader Magazine Issue 32 Q1 2014

When Mark Wetjen was elected as acting chair of the Commodity Futures Trading Commission (CFTC), the first thing that occurred to us was George Harrison.

All you need is alpha

John Lennon and Paul McCartney got all the attention. Ringo Starr built up a devoted fan base who loved his bouncy, ordinary-guy sensibilities. Meanwhile George was always known as the "quiet Beatle". He was the one who stayed out of the limelight, who said little but chose his words carefully when he did.

That has been Wetjen's manner in his time at the CFTC. He gave fewer speeches than Chairman Gary Gensler or Commissioners Scott O'Malia and Bart Chilton. But he has been a forceful presence nonetheless, arguing for a common-sense approach that has had scant trace of ideology during some of the protracted debates at the Commission.

So in a way, it was not a surprise that Wetjen got unanimous support to lead the way during the time between Gensler's departure and his ultimate successor's appointment. As we went to press, the question of how long that period would be was still unclear. Republican opposition to key appointments by President Barack Obama has been a staple feature of the Washington political landscape.

If Wetjen is George, it's easy to see who Chilton resembled. The pun-obsessed, jokey Chilton would have to be Ringo. That leaves the outspoken O'Malia as our fiery John Lennon and perhaps Gensler as our Paul McCartney.

The Beatles were of course a foursome and the CFTC is a quintet, where majority rules. It would be a stretch to make the case that Jill Sommers was the "Fifth Beatle", a title usually reserved for the Beatles producer George Martin. It would be even harder to cast her as Yoko Ono. So, it is easy to see how all this role play stuff can quickly break down.

Still, as the Beatles epitomised the 1960s, the team under Gensler has undoubtedly been the regulatory combo that got things done in the post-crisis era. Despite all the public airing of frustration (didn't we also see that with the Fab Four near the end?), there has been a series of transformative measures. While Europe has been slowly deliberating, the CFTC has led the way.

Just as the Beatles eventually broke up, much of the Gensler team is gone now too. If Timothy Massad makes it through the confirmation process, will he be a Macca 2.0? Or can we expect something entirely different? As the man who led the "TARP" rescue efforts, he has a track record as a government interventionist. How will that sit with the pro-market mindset of O'Malia/Lennon? And if there are pyrotechnics, can Wetjen/Harrison convince them to make music together?