The fines recovered by the CFTC go to the U.S. Treasury Department and aren’t used to fund the agency, Gensler said, adding that while he doesn’t advocate funding the CFTC with that money, it’s worth recognizing that “the CFTC is a good investment for the American public.”
Wall Street, trying to preserve profits from swap trading in the face of greater regulation, has found a new way to keep some of its overseas deals private. Banking lawyers have seized on the wording of Footnote 513, contained in an 84-page policy statement issued in July by the CFTC. The largest banks told swap brokers in late September that the language means certain swaps still don’t fall under the agency’s new trading rules, according to three people briefed on the discussions.
CFTC budgetary constraints were cited by Bart Chilton, a Democratic commissioner, in his support last month of a proposal from the Obama administration for a targeted transaction fee for traders of futures and swaps.
Webb said such a transaction tax isn’t a good idea as it creates the wrong incentives for regulators.
“It would be akin to a funding a police department through traffic citations,” he said.
The forced time off affects everyone in the agency except the four active commissioners, said Steven Adamske, a CFTC spokesman. The CFTC’s budget is currently $195 million, Gensler said in testimony in July. Obama has requested an increase to $315 million for fiscal year 2014. Congress hasn’t yet passed the president’s budget.
The fines and penalties it announced today total more than seven times its annual operating budget, the CFTC said in a statement today.
The CFTC avoided furloughing employees this year with extra money left over from 2012, cost cuts and $10 million in funds that Congress earmarked for technology, Gensler said.
“Travel, discretionary spending and outside non-technology contractors have been cut to a bare minimum,” he said in the e- mail. “As a result, we are now faced with administrative furloughs.”