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Budget Crunch May Force Financial Regulator to Forgo Investigations

Top officials at the Commodity Futures Trading Commission (CFTC) say budget constraints are hurting their agency’s ability to do its job properly. In a speech Thursday, CFTC Chairman Gary Gensler said the agency may have to delay or skip investigations due to lack of resources.

“One of the greatest threats to well-functioning, open, and competitive swaps and futures markets is that the agency tasked with overseeing them is not sized to the task at hand,” he said.

Gensler went on to point out the agency’s oversight responsibility has multiplied more than 10 times in the last four years, but the agency’s size and budget have grown only slightly. Last week, he notified employees they would be on administrative furlough for up to 14 days this year.

David Meister, who stepped down as CFTC enforcement chief on Wednesday, expressed a similar concern. In an interview with The Wall Street Journal last week, he called the agency “absolutely undersized.” He said the enforcement division has 155 officials, down 10 percent from when he started.

From The Wall Street Journal:

"That's a very small staff compared with the size of the job," Mr. Meister said, comparing the CFTC with the Securities and Exchange Commission, which has more than 1,200 enforcement officials. "It's remarkable how small we are."

The funding squeeze is forcing the CFTC to make "some very tough choices" about its work, Mr. Meister said. One example: the agency's decision not to charge Julien Grout and Javier Martin-Artajo, the two former J.P. Morgan traders accused by the government of hiding multibillion-dollar losses.

Another CFTC official told The Financial Times companies have been left waiting more than six months for clarifications on recently issued rules because employees are over-burdened with other tasks.

By: Avery Kleinman
Beth Daley Impact Fellow, POGO

Avery Kleinman At the time of publication Avery Kleinman was the Beth Daley Impact Fellow for the Project On Government Oversight.

Topics: Financial Sector

Authors: Avery Kleinman

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