Budget This

May 26, 2017

Robert Zwirb comments in The Risk Desk on CFTC Commissioner Sharon Bowen's criticism of her agency’s budget, CFTC Chairman Chris Giancarlo's request for $31 million bump in the budget, and the call for funding by way of user fees.

An excerpt from The Risk Desk, May 26, 2017:

Cadwalader’s Bob Zwirb commented this week on Commissioner Bowen’s criticism of her agency’s budget, Giancarlo’s request for $31 million bump in the budget and the call for funding by way of user fees.

He said that calls for the increased funding of regulatory enforcement agencies are usually hard to resist and, conversely, are difficult to criticize, “especially in the nation’s capital.”

“Such calls should not be divorced from an examination of the costs and benefits of the underlying policies being promoted. It should not be sufficient to call for `increased resources to enforce our regulations,’ as Commissioner Bowen said in her statement, when a case can be made that many of the rules adopted during the past decade are (in the words of the current acting chair) flawed,
unduly burdensome or unnecessary for the proper function of the markets.”

It should go without saying, Zwirb adds, that increasing regulatory and enforcement responsibilities do not always justify more budgetary resources, especially where such increased responsibility is in part a function of an agency’s past efforts to induce Congress to bestow it with more power, as is the case here. “If Congress is not careful, fulfilling such calls for more money may only incentivize such opportunistic behavior on the part of the agency in the future,” he says. “What is sorely needed now, especially following years of hyperactive rulemaking and enforcement activity, is an examination of the assumptions that underlie many of those rules, as well as assessments of how they work in the real world, and how enforcement of them affects the markets, if rational public policy is to ensue in the future,” Zwirb says.

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