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Letting the CFTC Staff Run the Show

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Many independent agencies are governed by politically balanced boards or commissions in order to ensure that their policy decisions are temperate, represent multiple viewpoints, and allow for accountability. Agency decision-making power resides with the commission, the members of which are appointed by the president with the advice and consent of the Senate and therefore can be made to answer for their policy calls. The job of agency staffers is to implement the commission's policy decisions, not make them. The principle that political appointees should be responsible for policy decisions applies in both the rulemaking and enforcement contexts. When agencies forget this principle and start encouraging staff to make key decisions without commission input, government's accountability to the American people suffers.

Commissioner Scott O'Malia of the Commodity Futures Trading Commission pointed out one such instance earlier this week. The CFTC is handing over to the staff broad authority to conduct enforcement investigations and exercise the attendant subpoena power. These investigations are not targeted, but rather are conducted pursuant to "omnibus" orders that allow the staff to go on unsupervised fishing expeditions. A procedural gimmick known as the "absent objection" process could enable the staff to extend the omnibus order indefinitely. O'Malia is particularly concerned about the commission's deference to the staff's judgment with respect to the exercise of the CFTC's increased and uncharted enforcement powers under Dodd-Frank.

The CFTC is not alone in ceding enforcement policy-making authority to the staff. For example, several years ago, the SEC gave its staff the power to issue subpoenas without the commission's sign-off and curtailed commission input in shaping enforcement settlements. This is a dangerous trend because--in the words of Commissioner O'Malia--"Congress intended a decision to bring an investigation to be reflective of a shared opinion of the majority of the Commissioners, rather than a unilateral ruling of the Division of Enforcement's staff." Delegated policy-making subverts the principles of accountability on which independent agencies' legitimacy depends.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.