By Tim Devaney - 03/06/14 02:52 PM EST
A leading House Democrat on the Appropriations Committee said Thursday that the federal regulator for commodities has such a small budget that it "sucks."
During a hearing, Rep. Sam Farr (D-Calif.) said the Commodity Futures Trading Commission (CFTC) is grossly underfunded and called on Congress to give the agency more money to regulate commodity markets such as oil, gold, wheat and coffee.
"Do we really want to handicap this agency at a time when we enacted a law and told them what to do and then turn around and not allow them to carry it out?" he added. "It could be very dangerous."
President Obama released his 2015 budget proposal earlier this week, which included a $280 million request for the CFTC that would amount to a 30 percent increase in funding for the agency.
In the wake of the financial crisis, Congress passed the Dodd-Frank financial reform law, which gave the CFTC more responsibility to regulate the derivatives markets. But top officials at the commission have complained that its current $215 million budget is not enough to adequately regulate the commodity markets.
CFTC acting Chairman Mark Wetjen, who testified at the hearing, welcomed the proposed $65 million budget increase for the agency and said it would provide the agency with enough money to hire more staff and obtain the technology it needs to crackdown on fraudulent and risky trading.
"The request before you today will get us to the minimum level of staff that I believe we need," Wetjen said.
But Republicans objected to giving the CFTC more money. Rep. Robert Aderholt (R-Ala.), the subcommittee chairman, said it is a "misperception" that the commission is starved for resources.
"I want to correct the misperception that CFTC is resource-starved," Aderholt said. "This agency has received seven consecutive annual increases in funding, an overall increase of 92 percent since the financial crisis of 2008. There are not many agencies that have enjoyed such attention."
But Farr questioned whether the CFTC's budget has grown proportionately with the size of the commodity market.
The industry has seen substantial growth in trading volumes in recent years, Wetjen noted, with the derivatives markets valued at between 400 trillion and $500 trillion annually.
Meanwhile, Wetjen said the CFTC is understaffed because the agency's 647 employees account for less than 10 percent of the number of commodity firms that it regulates.
The CFTC's budget proposal is slightly less than the $315 million it requested last year, though it would still provide a significant increase from the amount that Congress agreed to give it at that time.
Republicans said they were happy to see this, with Aderholt calling the agency's past budget requests "bloated."
"The budget this year is a little bit different, because it tries to be respectful of Congress's direction," Wetjen said, adding, "In light of that, it just felt sensible and the right thing to do to be a little more constrained and restrained in the request."