The Commodity Futures Trading Commission (CFTC) last Monday was rewarded for its years of lobbying when the Obama administration proposed a major hike in the annual budget of the agency that oversees the energy futures markets. However, the Obama administration's requested budget increase for another regulator, the Federal Energy Regulatory Commission (FERC), was more modest.
President Obama proposed a budget of $261 million for the CFTC for fiscal year (FY) 2011 -- a 55% hike ($93 million) over the budget of $168.8 million in the current FY. "The president's budget request provides a much-needed funding increase to better enable the CFTC to regulate the markets and protect the American public," said CFTC Chairman Gary Gensler.
Of the proposed $261 million, $216 million -- an increase of $47 million over FY 2010 -- is being sought to fund the CFTC's current operations, while an additional appropriation of $45 million and 119 full-time employees (FTEs) are proposed for the agency to implement the administration's comprehensive proposal for financial regulatory reform.
The CFTC for years has been calling on the administration and Congress to give the agency a greater "infusion of human and fiscal capital" to regulate the futures and options markets, which have grown exponentially over the years (see NGI, June 9, 2008).
"The number of actively traded futures and options contracts went up seven-fold, and many of these have become considerably more complex in nature...What was one just a $500 billion business has grown to a $33 trillion industry," Gensler said in a letter last Monday to the House and Senate budget writers.
Meanwhile, "as we began FY 2010, the Commission had onboard more than 580 staff. While this gets up back to our staffing levels 10 years ago, it is just a start. I believe that merely raising our staffing levels to the same as a decade ago will not be enough to adequately fulfill the agency's statutory mandate," he said.
The Obama administration requested $315.6 million for FERC in FY 2011, an increase of 5.9% ($17.5 million) over the current FY. The budget calls for 1,539 FTEs -- an addition of 11 FTEs to carry out FERC's reliability and critical infrastructure protection standards development and compliance processes; enforcement efforts; and policy reforms related to renewable resources and advanced technologies.
The bulk of FERC's proposed budget is earmarked for electric power ($167.76 million), while $77.52 million will be allocated for natural gas and oil pipelines, and $70.5 million for hydropower. Likewise, the majority of the FTEs (832) will be devoted to electric power, while 379 FTEs will work on natural gas and oil pipeline issues, and 328 FTEs on hydropower issues.
FERC recovers the full cost of its operations through annual charges and filing fees assessed on the industries it regulates.
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