According to The Wall Street Journal President Obama is asking for a 13 percent increase in the SEC’s budget and a 44 percent increase for the CFTC.
This would put the SEC’s budget at over $1 billion and the CFTC would be at $160 million. The administration hopes the SEC will use the additional funds to “pursue a risk-based, efficient regulatory structure that will better detect fraud and strengthen markets.” With the money, the CFTC would increase staff, and would like to regulate credit derivatives.
I am not taking issue with the spending, but I am interested in knowing what the money would be better spent on. Should the SEC and the CFTC spend more on prosecuting violations, imposing additional rules, or some combination of the two?
Andrew Ogletree
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Speaking from personal experience, I think the CFTC needs a bigger staff.
From your experience, Drew, should the CFTC use that increased staff to go after more violation or implement more prospective rules? What are your thoughts on the CFTC regulating credit derivatives?
The CFTC doesn’t really implement rules in the same fashion as the SEC. The CFTC is a principles-based regulator, which leaves interpretation of a registered futures entity duties up to that entity. Thus, the CFTC wouldn’t use funds to come up with new rules (not that I think coming up with rules is that expensive of a process anyway). Funds need to be spent on better technology and higher wages so that the CFTC and SEC can attract top talent and not have their top positions be simply rotating doors to higher paying private jobs.