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CFTC “on its knees”

The CFTC’s perennial underfunding problem just got worse. In a largely symbolic move, yesterday the White House proposed a 2015 budget for the agency of $280m., a shortfall of $35m. from its 2014 number. In contrast, the relatively well-funded SEC benefits from a small increase. Commissioner Bart Chilton was the first to respond in a typically-quotable speech:

“Our staff is on its knees, some reaching for the exit doors and others having already bailed. Employee morale is the lowest I’ve witnessed…”

“This budget request portends a self-inflicted wound upon the essential goal of appropriate and needed oversight and enforcement. Dodd-Frank is a success story, and the under-resourcing of the CFTC is pushing us dangerously close to seizing defeat from the jaws of victory.”

“In summary, this budget asks a strained and exhausted CFTC staff to do the impossible with too little. We work hard here, and have been granted needed regulatory tools to do the job. A magic wand, however, is not among those tools, and we are not magicians. The Agency requires basic, minimal support to accomplish our newly assigned tasks. Sadly, in this regard, the President’s budget request fails.”

The speech highlights the departments that will be affected by the cuts (all of them) and characterises the proposal’s suggestion of self-funding via an agency-levied transaction fee as “the old smoke and mirrors, but with a strobe for enhanced misdirection”. Commissioner Chilton is no stranger to hyperbole, but in this regard his comments are almost measured. This year alone, over a dozen senior CFTC employees have spun through the revolving door to Wall Street, many citing low pay as the reason. In early January the agency was forced to go cap in hand to the Treasury for emergency funding to prevent short-term closure. In a recent survey by the Partnership for Public Service, the CFTC was ranked among the worst of government agencies, receiving low scores for pay, work-life balance and training.

In the actual world, the President’s proposal has virtually zero chance of adoption, the Democratic Congress and Republican-controlled Senate already agreed a deal in December 2013, setting budget levels for the next two years. However, the proposal is a clear signal of the White House’s priorities, and represents a political slap in the face for the CFTC. This contentious and important issue is likely to be revisited on Thursday when acting Chairman Mark Wetjen speaks before the U.S. House of Representatives appropriations panel.

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