While the financial markets are closely eyeing the shutdown of the government, Wall Street itself is barely being monitored by one of its federal watchdogs, who says it’s had to furlough most of its staff.
The Commodity Futures Trading Commission, which employs around 700 people, is down to just 30 employees as the government shutdown enters its third week.
Among other high-profile investigations recently, the CFTC filed charges in June against Jon S. Corzine, the former New Jersey senator and governor who oversaw the costly collapse of investment firm MF Global.
The commission also regulates the once-secretive derivative market, which came under scrutiny during the 2008 financial meltdown that saw taxpayers fund a $182 billion bailout of insurance giant AIG.
“It’s an agency people don’t recognize, but they’re overseeing the agricultural, energy and metals commodities, which have a huge impact on the prices of things we buy every day,” said Tyson Slocum, energy program director for the watchdog group Public Citizen. “Having the market monitored is crucial to ensure the prices are based on supply and demand and not market shenanigans.”
Mr. Gensler, whose five-year term expires at the end of the year, said the commission’s office in Kansas City, where the Kansas City Board of Trade operates a commodity and futures exchange, is completely shut down.
Other CFTC units have a handful of employees still reporting to work, but the agency has effectively stopped monitoring the markets, the chairman acknowledged.
“Under a shutdown scenario, government regulators will be handcuffed in our ability to go after crooks who are trying to evade our oversight and protection of markets,” Mr. Chilton said in a statement last month.
“You can bet the ‘do-badders’ are licking their chops.”
Asked if he’s worried about fraud in the markets in the absence of a regulator, Mr. Gensler said while the commission is “dark right know,” officials still get data every day, which officials can use when the shutdown ends to uncover questionable trading activity.
Still, Mr. Gensler said the CFTC is the only federal financial regulator closed these days because of the government shutdown. The newly created Consumer Financial Protection Bureau is self-funded, while the SEC had funding carried over from the previous fiscal year.