Statement of Commissioner Bart Chilton on the President's FY 2015 Budget
March 4, 2014
The purview of the Agency’s oversight, as a result of the Wall Street Reform and Consumer Protection Act (Dodd-Frank), has increased more than 40-fold, monitoring hundreds of trillions of annualized dollars of trading. I am disappointed that the President's budget, if adopted, would be insufficient to adequately fund the Agency at the levels required to oversee and enforce markets.
Dodd-Frank was passed in reaction to the 2008 economic collapse. I wonder if some forget why the meltdown occurred and what is needed to secure solid footing. Even during a time of deficit, our country must do all it can to avoid a repeat of what led to the economic mess. Better financial compliance, oversight and enforcement should play a large role in doing so. But those efforts need to be adequately funded.
The President’s request of $280 million, a $35 million cut from last year’s request, is woefully insufficient for needed oversight and enforcement.
The CFTC was given a large swath of the swaps market oversight and regulation--tens of trillions of dollars in formerly dark market trading. But we have not received a commensurate increase in funding to bring needed light to these markets, despite being assigned the authority to do so by Congress. We have the mandate, but not the money, to do the job.
This is a critical time at the Agency. We have issued major regulatory measures in accordance with the law. Now the hard work of compliance, surveillance, and enforcement needs to begin.
Market participants, exchanges, and foreign and domestic regulators have already experienced substantial delays associated with the limited bandwidth our current budget provides. It makes the derivatives industry less competitive and healthy and the markets more uncertain. This budget won’t help alleviate that unacceptable state of play.
In my years as a Commissioner, since 2007, there’s not one constituency in our regulatory sphere that hasn’t observed and downright complained that we need more people and resources to do our job.
Our staff is on its knees, some reaching for the exit doors and others already having bailed. Employee morale is the lowest I’ve witnessed, dropping 13 percent in just the last year. The last three years of late nights and weekend work, of doing as many as three jobs at once, was rewarded with...wait for it...administrative furlough days! That’s a punch to the gut of any worker, but for those in government service who already receive less than they could command in the private sector, it is an unacceptable and unsustainable circumstance.
Yet, the President’s budget request would fund 100 less employees than we need, 100 less than he requested last year. What occurred to make the mandate less needed or less important? Are we done with all of the rule writing? No. Is there less to oversee? Nah. Have all the bad actors in the financial sector cleaned up? Nope.
I’m frustrated to say: the funding requested is insufficient to do the job. Here are some ugly impacts of the President’s request.
1. Our technology people may not be able to support implementing the regular collection of key data in the marketplace. I am fearful to say where, so as not to tip off market participants, but our coverage will not be as robust or comprehensive as is required. Our ability to enhance and supplement surveillance activities will be too limited.
2. Our Division of Enforcement has substantial staff resources expended in litigation. The inability to fully resource our enforcement efforts will mean, at a minimum, investigations will be slowed and we will have to prioritize the cases. We are already investigating cases that are years old. We may not even be able to get to many cases. That means some may escape justice. I am greatly concerned that we, in our enforcement area particularly, will lose more staff over the next few months. And, generally, CFTC staff, who have gone without any substantial raises for three years and counting, will continue to seek employment elsewhere.