Calls for the CFTC and SEC to merge are now coming from both sides of the aisle. House Republicans agree with the New York Times that better oversight would be achieved through a merger. In a report released today, the House GOP is blames the downfall of MF Global in part on a rift between the agencies.
The report cites a lack of communication between the SEC and CFTC during the months leading to MF Global’s bankruptcy. Apparently, the SEC left the CFTC in the lurch about the firm’s troubles. It wasn’t until August 25 that the CFTC became involved, when MF Global reported a “capital deficiency.” Likewise, the CFTC failed to notify the SEC about the method used by MF Global to calculate its obligation to customers.
The argument from the GOP stems from the idea that we don’t need more regulation, although it does so from the perspective of manpower.
“We didn’t need additional regulation. We needed regulators actually doing their job,” said Representative Randy Neugebauer, chairman of the oversight panel.
But the argument made by Jesse Eisinger of the New York Times suggests that merging the two agencies would provide it better funding–not more manpower–and therefore give regulation more teeth.
Eisinberg’s take on a merger:
The structural issues go deeper. The Commodity Futures Trading Commission and the Securities and Exchange Commission still exist as two separate agencies, a huge missed opportunity for Dodd-Frank and one borne of politics. The C.F.T.C. is protected (and bashed) by the Senate Agriculture Committee, the S.E.C. by the Senate Banking Committee. Merging the agencies would mean that one of those committees would lose power, so forget about that. Gary Gensler, the head of the commodities commission, has been tough, but has been limited by his agency’s paltry resources. And, anyway, these agencies are still run by commissions, not single heads, and they rely on Congress for their financing. It’s little surprise that such a structure creates plodding impotence.