Brooksley Born, a former head of the Commodity Futures Trading Commission, and Democratic members of Congress hold a press conference outside the US Capitol to speak out against CFTC budget cuts advanced by Republicans. Photo by George Zornick
If you held a contest to determine the most important government agency nobody’s heard about, the Commodity Futures Trading Commission would be a strong gold medal contender. Charged with overseeing commodity futures and options markets—which, when the CFTC was created in 1974, mainly involved agricultural futures—the agency now oversees the absolutely massive financial derivatives market on Wall Street, as well as oil futures markets.
This means that the relatively tiny agency has tremendous influence over the financial sector’s biggest money machine—one that has already helped bring down the world economy once within the past few years. And oil speculation is a significant factor in driving the prices Americans pay at the pump.
But perhaps taking advantage of the CFTC’s obscurity, Congressional Republicans have made a brazen attempt to slash the agency’s budget and reduce staff. The House Appropriations Subcommittee on Agriculture sent out a budget that provides only $180.4 million to the CFTC, which is a $24.6 million cut from last year’s already anemic funding level. This is well below the $308 million in President Obama’s budget request, which supporters of Wall Street reform universally agree is still too low anyhow. The Republican request would likely lead to lay-offs at the agency, according to Congressional staffers familiar with the matter.
Late last week, Congressional Democrats—and one former head of the CFTC—gathered outside the Capitol building to communicate the gravity of the cuts, especially at a time when the Dodd-Frank reforms are expanding the agency’s mandate.
“The House Appropriations subcommittee’s failure to increase the CFTC’s budget to reflect these increased responsibilities—and indeed its irresponsible proposal to cut the CFTC’s budget by $25 million—are efforts to eviscerate vitally important financial regulatory reform and to cater to the interests of Wall Street rather than the needs of the American people,” said Brooksley Born, who ran the agency from 1996 to 1999.
“What the Republicans are doing is voting to take the cops off the beat. Wall Street is incapable of policing itself,” said Representative Ed Markey. “The invisible hand of Wall Street markets has waved off concerns, waved off regulations, and then reaches into our pockets and takes our money.”