Outgoing Commodity Futures Trading Commissioner Christy Romero warned the American public about potentially growing market uncertainty on May 27, following regulatory changes at the CFTC under the new Trump administration.

Romero Pushes for Clear, Consistent Regulation

While giving her farewell remarks at The Brookings Institution in Washington, D.C., on Thursday, Romero expressed concerns that the current trend of “big swings” between “regulation and deregulation” could ultimately hinder the success of the nation’s financial markets.

“As the current administration pursues a deregulatory agenda in the name of growth, care should be taken not to remove the load-bearing resilience built into markets—resilience that has resulted in financial stability and protected our economy,” said Romero.

“Growth requires a regulatory environment where markets are financially stable and resilient during times of volatility, uncertainty, and stress,” she added.

Romero further urged regulators to “follow a steady, consistent path” in hopes of creating “a resilient, stable, and robust financial system and economy.”

“It’s a really tough challenge—one that requires independent regulators engaging with each other on a bipartisan basis and engaging with many stakeholders who use and need U.S. markets,” she said. “I plan to continue to share my voice, and I will always be rooting for the CFTC.”

Trump’s Crypto-Friendly Pick to Lead CFTC Unveiled

Romero’s final CFTC speech comes after she announced that she would step down in February following news that U.S. President Donald Trump would tap former commissioner Bryan Quintenz to lead the agency.

Romero is the fourth CFTC official set to step down in recent months, with fellow commissioners Christy Goldsmith, Caroline Pham, and Summer Mersinger slated to depart the agency as the Trump administration continues its deregulatory efforts across the crypto sector.

With over $3 million held in digital assets, Quintenz is largely viewed as a crypto-friendly pick to lead the CFTC and is expected to begin his new role sometime this summer. Romero’s final day at her current position is scheduled for May 31.

Berkshire Hathaway (BRK.A 1.99%) (BRK.B 1.76%) has crushed the S&P 500 (^GSPC 1.47%) over the last 60 years thanks in part to savvy investment decisions about long-held stocks like American Express and Coca-Cola — and more recently Apple. But Berkshire’s stakes in public companies may no longer be the driving force behind its success.

On May 3 Berkshire published its first-quarter results, which included a new record position in cash, cash equivalents, and investments in U.S. Treasury bills of $342.39 billion. As of May 2, the value of Berkshire’s public equity portfolio was $277.41 billion, or roughly a quarter its market cap of $1.16 trillion. The rest of Berkshire’s value comes from its subsidiaries.

Berkshire has plenty of valuable wholly-owned businesses, from the BNSF railroad to utility giant Berkshire Hathaway Energy. But by far the most important category is its property and casualty (P&C) insurance businesses. At Berkshire’s annual shareholder meeting on Saturday, investors had plenty of questions about the future of the P&C businesses: from how they will fare in the face of an onslaught of private equity investment to the changing landscape of insurance in the autonomous age.

Are potential changes in P&C insurance enough to derail the Berkshire Hathaway investment thesis? Here are key takeaways from what Warren Buffett and Berkshire’s vice chairman of insurance operations, Ajit Jain, said during the annual meeting.

Image source: Getty Images.

A changing game

In Q1, income from insurance underwriting and insurance investment combined was $4.23 billion, or a whopping 43.9% of total operating earnings.

As insurance has grown, it has become a bigger topic at Berkshire’s annual meetings. And for good reason, considering its impact on operating earnings.

Berkshire has maintained its focus on the P&C side of the insurance industry — distancing itself from the life insurance business, now dominated by private equity. During the annual meeting, Buffett and Jain said that private equity firms can make a lot of money in that area, but that the leverage and credit risk aren’t appealing to Berkshire anymore from a risk-management standpoint.

Another change to the insurance business has been the rise of autonomous vehicles. An audience member asked if this rise would change the underwriting requirements of the insurance business. Buffett responded, “We expect change in all of our ideas,” welcoming changes in the auto insurance industry. He also said that an annual auto insurance policy from GEICO in the 1950s could cost as little as $40, whereas today, it wouldn’t be out of the ordinary to have a $2,000 annual policy. Even as the cost of insurance is up some 50-fold, Buffett said that accidents have fallen by more than 80%. So the prospect of autonomous vehicles reducing accidents further doesn’t necessarily jeopardize the insurance investment opportunity.

Jain said that full vehicle autonomy could transform the auto insurance business from concentrating on the risks of operator error to instead focus on the automaker’s errors and omissions in creating autonomous vehicle driving capabilities, which would essentially become a product liability issue. Buffett followed up by reaffirming his confidence that the auto business has been a huge growth industry, saying “We do have unusual advantages in the insurance business that can’t be replicated by the competition.”

It’s worth noting that we’re a long way away from full autonomy on U.S. roadways. As autonomous vehicles make up a larger share of the vehicle mix and encounters between autonomous vehicles and human-driven vehicles rise, it wouldn’t be surprising if insurance becomes an even more profitable business — either through policies controlled by owners of autonomous vehicles, or maybe by the auto manufacturers including a policy with the sale of the vehicle as a value-added option.

Tesla (NASDAQ: TSLA), for example, has gotten into the insurance business through Tesla Real-Time Insurance, which measures a safety score and offers discounts based on whether its “Full Self-Driving” feature is used at least 50% of the time. However, insuring fully autonomous vehicles is a different animal.

Focusing on the long term

Widespread adoption of autonomous vehicles would be a game changer for the P&C business, but it’s an adjustment that the whole industry must adapt to — not just Berkshire. Still, insurance has become a crucial element of Berkshire Hathaway’s investment thesis, so you may want to monitor how technology advancements impact underwriting criteria and Berkshire’s operating earnings.

When looking at Berkshire (as with any company), it’s best to focus on where it will be several years from now, instead of getting too caught up in changes to quarterly or annual results. As Buffett said during Saturday’s annual shareholder meeting, “We don’t do anything based on its impact on quarterly or annual earnings.”

Staying true to this philosophy will likely give Berkshire Hathaway an advantage in navigating vehicle autonomy. The long-term mindset could even lead it to gain market share in the industry, especially if its competitors are more interested in making money quickly than building lasting businesses.