House Democrats Barney Frank and Michael Capuano are introducing a bill seeking to merge the Securities Exchange Commission (SEC) and the Commodities Future Trading Commission (CFTC). In addition, the bill would establish a new independent regulatory commission known as the “Securities and Derivatives Commission.” As to this latter new Commission, the bill specifies that the Commissioners be knowledgeable as to the regulation of derivatives, but does not actually specify anything that the Commissioners would be required to do or any responsibilities that they would have (so it seems like a great job!).
Lofchie Comment: Perhaps this was the brilliant master plan all along: (i) take a regulatory structure that was so jumbled, confused and expensive that no one could possibly support it, (ii) adopt a 2,400 page bill to make that scheme infinitely worse and (iii) at the last moment, produce the cure: a new Derivatives Commission that has no employees and does nothing.
In all seriousness, the lines of regulatory authority between the SEC and the CFTC are fundamentally absurd. In an era where the government is strained for resources to fulfill its missions, the wastefulness of the currently regulatory structure can not be justified. This does not mean that it is necessary to combine the two Commissions, but rather (at a minimum) that splitting authority over “securities” and “securities derivatives” in the current manner is a drag on the government, and a drag on the economy. (I will have more on this issue.)
View Merger Bill in full here (links externally to PDF).