August 7, 2022

DealBook: C.F.T.C. Faces More Budget Woes

Gary Gensler is fighting for funding — again.

The Republican-controlled House of Representatives on Tuesday debated a measure that would slash the budget at the Commodity Futures Trading Commission by $30 million.

The proposed 15 percent cut comes as the agency, led by Mr. Gensler, struggles with a widening mandate under the Dodd-Frank regulatory overhaul. The C.F.T.C. recently delayed the implementation of certain rules surrounding the derivatives market, which was at the center of the financial crisis.

Mr. Gensler is making his case for extra funds on Wednesday.

“Only with reform can we reduce risk in the swaps market – risk that contributed to the 2008 financial crisis,” Mr. Gensler said in prepared testimony before the Senate Agriculture Committee. “Until the C.F.T.C. completes its rule-writing process and implements and enforces those new rules, the public remains unprotected.”

But “reform” does not come cheaply, he said.

For months, Mr. Gensler has been fighting attacks on his agency’s spending. Republicans, contending that the agency is overstepping its authority in the derivatives markets, have pushed to curtail the C.F.T.C.’s spending.

Although the C.F.T.C. received a 20 percent funding increase April, bringing its budget to $202 million, it fell short of what President Obama had requested for the agency.

As DealBook has previously reported, the agency is still struggling to fill crucial jobs, enforce new rules and upgrade market surveillance technology. The budget woes also have forced the agency to delay some investigations and forgo other potential enforcement cases altogether.

Spending cuts, Mr. Gensler said, would only further undermine the agency’s enforcement efforts.

“It would hamper our ability to seek out fraud, manipulation and other abuses,” he told the committee on Wednesday.

Mr. Gensler has long called for a $108 million funding increase. The funds are necessary, he said, to prevent another financial crisis.

“The C.F.T.C. must be adequately resourced to police the markets and protect the public,” he said on Wednesday. “Without sufficient funding for the agency, our nation cannot be assured of effective enforcement of new rules in the swaps market to promote transparency, lower risk and protect against another crisis.”

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