The Commodity Futures Trading Commission (CFTC) has been told by Congress to do more with less, taking on the responsibility of regulating the multi-trillion-dollar swaps market while having its funding frozen at an inadequate level, according to the agency.

 

In addition to overseeing the trading of futures, the CFTC must keep tabs of the $300 trillion market for swaps. Market swaps are complicated loan exchanges in which borrowers “swap” different types of loans, such as fixed rate loans and floating rate loans. Each party in the swap is hoping that the loan he has gotten has an advantage (i.e., creating capital losses to avoid taxes).

 

To watch over all this, the agency has to get by with a budget of a little more than $200 million.

 

CFTC Chairman Gary Gensler said that at this level, his agency can employ 710 staffers, which is only slightly larger than its team during the 1990s.

 

Gensler has told lawmakers the CFTC needs another $102 million to properly do its job.

 

A group of consumer and public interest groups wrote to Congress recently urging it to increase funding for the CFTC.

 

“Failing to provide the additional $102 million requested in the President’s budget to enable proper supervision of hundreds of trillions of dollars in derivatives and commodity markets would not save money,” the letter reads. “It would instead protect a broken and dangerous status quo, undermine effective oversight of our financial markets, and leave our economy at risk.”

-Noel Brinkerhoff

 

Will Congress Spare $100 Million to Oversee $300 TRILLION Swaps Market? (by Michael Smallberg, Project on Government Oversight)