CFTC Commissioner Chilton Criticizes the President's FY 2015 Budget Funding the CFTC (with Lofchie Comment)

CFTC Commissioner Bart Chilton issued a statement criticizing the President's FY 2015 budget.

Chilton stated that Dodd-Frank gave the CFTC a lot of new regulatory oversight, but did not and has not provided adequate funding. According to Chilton, the President's request of $280 million is $34 million less than the previous year's request and is "woefully insufficient for needed oversight and enforcement." He further stated that the CFTC has the mandate, but not the money, to properly oversee the futures and swap markets.

Chilton went on to note that the FY 2015 level of funding would fund 100 less employees than last year, stating that all other financial regulators except the CFTC have some sort of self-funding, leaving the agency at a critical disadvantage.

Lofchie Comment: Commissioner Chilton is undoubtedly right that the CFTC cannot possibly carry out its assigned missions at its current levels of funding. It is also true, however, that over the past several years the CFTC refused to prioritize the use of its resources in any meaningful fashion. Rather, it simply asserted that it should exercise its authority to the maximum extent of its jurisdiction (and arguably beyond) even when there was no social benefit. The clearest example of this is the CFTC's determination that it should double-regulate SEC-registered investment companies that enter into swaps. How could an agency that is strapped for funding possibly believe that it is a good use of its dollars to impose an additional level of regulation on companies that were already heavily regulated by the SEC?Similarly, the CFTC's rulemaking process is a demonstration of the truism that haste makes waste. Numerous rulemakings have been pushed through with insufficient consideration only to be partially withdrawn (or in some cases made worse) by the issuance of no-action letters: 79 no-action letters in 2012, 86 in 2013, and if the CFTC were to continue on its current 2014 pace, it could hit 120 this year.In addition to poor resource management, there is the loss of the position limits litigation, and the very possible loss of the litigation over the CFTC's cross-border guidance. These are costly affairs, but foreseeable expenses also caused by a troubled rulemaking process.Had former CFTC Chairman Gensler been given more money to spend, regardless of how much, it would not have been enough. All staffers who remained at the CFTC through this five-year tempest are deserving of merit bonuses; it is a wonder any of them stayed. Perhaps Congress could find a way to pay them directly without risking that the CFTC will expend any largess on further rules that are to be amended and rescinded by no-action letters.

See: Commissioner Chilton's Speech.