Congressman Robert Aderholt (AL-04), Chairman of the Agriculture, Rural Development, Food and Drug Administration and Related Agencies Subcommittee on the House Appropriations Committee, released the following statement after the Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler and Commissioner Scott O'Malia (who provided a dissenting opinion to the CFTC's FY14 budget request) testified before the Subcommittee regarding CFTC's priorities and FY14 budget request of $315 million, a 53 percent increase over the current levels and a 44 percent increase in staff."
"There is no doubt that the futures, options and swaps marketplace the CFTC is responsible for overseeing is integral to our nation's free-enterprise system," said Aderholt. "Since the financial crisis of 2008, the CFTC has enjoyed six consecutive increases in funding, for an overall increase of 85 percent. In light of the Commission's funding history and today's tough economic environment, this Subcommittee must question the wisdom of fulfilling such a large request. We must ensure the CFTC is executing its mission, while giving American taxpayers the best possible bang for their buck."
"In FY12 the bankruptcies of MF Global International and Peregrine Financial resulted in the first ever loss of segregated customer funds in the future and options market. These companies took customer money and used it for risky investments and fraudulent activities that ultimately cost American investors $1.8 billion. Under its current outdated processes CFTC does not seem able to perform core functions, like protecting investor money here in the U.S. More money funneled into a broken system is not going to solve this problem or provide better oversight. I have a hard time finding a 53 percent budget increase justifiable at all, much less without significant oversight functions attached to ensure this does not happen again."
"Additionally, at a time when technology has allowed more than 80 percent of the transactions under the Commission's jurisdiction to be conducted electronically, the Commission continues to hire additional staff at a premium price, rather than make sound investments in technology to match the market. For example, in 2012 CFTC received more than 5,000 paper forms quarterly and entered them by hand into an electronic database. With 82 percent of the CFTC's staff taking home a six-figure salary, this is one expensive exercise. CFTC has returned to staffing levels similar to the early 1990's, when only 10 percent of the market traded electronically and people were needed to watch human traders. It seems completely unjustifiable that the Commission need the same number of employees as it did 20 years ago, when technology has completely revolutionized trading today."
"I appreciate Chairman Gensler and Commissioner O'Malia's testimony today, however, it seems the CFTC still has some serious work to do in properly prioritizing and managing its resources and fulfilling its core mission. Now more than ever we need to look for cost effective solutions to streamline our federal budget; the CFTC is certainly no exception. As we move through the appropriations process this year this Subcommittee will work to increase oversight and ensure American taxpayers see a real return on their investment." concluded Aderholt.
Aderholt currently serves as Chairman of the Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Related Agencies for the powerful House Appropriations Committee, is a member of the Committee's Commerce, Justice and Science; and Homeland Security Subcommittees, and also serves on the Helsinki Commission.