# Commodity Futures Modernization Act The **Commodity Futures Modernization Act of 2000 (CFMA)** was a deregulatory statute, enacted **December 21, 2000** and signed by lame-duck President [[Bill Clinton]], that exempted most **over-the-counter (OTC) derivatives** — including swaps and, critically, **credit default swaps** — from regulation by the [[CFTC]] and [[SEC]]. Tucked into a year-end omnibus appropriations bill and passed by a Republican Congress, it amended the Commodity Exchange Act to place OTC derivatives traded between "eligible contract participants" (sophisticated firms and individuals with $10M+ in assets) outside the requirements for clearing, margin, position limits, and exchange trading. The CFMA resolved a turf fight in the most permissive possible direction. In 1998 CFTC chair Brooksley Born had warned that the booming, opaque OTC derivatives market needed oversight; she was overruled by [[Federal Reserve]] chair Alan Greenspan, Treasury Secretary Robert Rubin, and deputy Lawrence Summers, and the CFMA codified the hands-off result. Two of its exemptions became infamous: the **"Enron loophole"** for energy derivatives, exposed when Enron collapsed in 2001, and the blanket exemption for **credit default swaps**, the instruments at the center of AIG's 2008 implosion. For the KB, the CFMA is the **twin of the [[Glass-Steagall Repeal]]** — the second of two 1999–2000 deregulatory acts that together cleared the legal ground for the [[2008 Financial Crisis]]. Where Gramm-Leach-Bliley tore down the wall between commercial and investment banking, the CFMA guaranteed that the explosive growth of derivatives would happen entirely inside the unregulated [[Shadow Banking]] system. It is a near-perfect illustration of the through-line the [[Financial System Timeline]] tracks: a deregulatory victory branded as "modernization" under [[Free Market Fundamentalism]], whose costs landed on the public less than a decade later. Its provisions were substantially reversed by the [[Dodd-Frank Act]] (2010), which finally pushed swaps toward clearing and CFTC oversight. ## See Also - [[Glass-Steagall Repeal]] - [[Shadow Banking]] - [[CFTC]] - [[2008 Financial Crisis]] - [[Dodd-Frank Act]] - [[Financial System Timeline]] - [[Financial System Hub]]