Warren Asks GAO to Review CFTC Staffing Cuts and Enforcement Drop
Commentary by Steven Lofchie
Senator Elizabeth Warren asked the Government Accountability Office to review workforce cuts at the CFTC and the effect on enforcement.
In a letter to Acting Comptroller General Williams Brown, Ms. Warren said that the CFTC's staff has been reduced by about 25 percent since January 2025, and that the CFTC has offered buyouts and early retirement as of June 2026. Ms. Warren stated that the cuts came under Acting Chair Pham as part of a government-wide reduction; current Chair Michael Selig said the CFTC is hiring but sought only three more enforcement staff.
Ms. Warren reported that enforcement has fallen sharply. Ms. Warren cited enforcement data indicating that CFTC brought 58 enforcement actions and obtained more than $17.1 billion in monetary relief in fiscal year 2024. Ms. Warren noted that in the 12 months after the change in administration, the CFTC brought 11 actions and obtained less than $1 billion, less than $10 million of it from cases the current administration filed.
Ms. Warren pointed to news reports that the CFTC curtailed crypto enforcement and aided prediction markets, and that career officials who raised concerns about several firms were removed. Ms. Warren stated that the CFTC also asserted exclusive jurisdiction over prediction markets and could take on more work if crypto market-structure legislation passes.
Ms. Warren asked the GAO to evaluate whether the cuts and buyouts: (i) complied with federal law, including ethics and civil-service rules; (ii) affected the CFTC's mandate and the enforcement decline; and (iii) affected rates of fraud, waste, and abuse.
Commentary
Senator Warren's criticism of the current CFTC for failing to match the former CFTC's record of winning enforcement awards is misplaced in important ways.
First, many of the CFTC's enforcement penalties were either in respect of firms' failure to save social media messages (where the penalties were disproportionately large to the true violation) or related to digital assets (where the true failure was the inability of the government to adopt workable statutes and rules), and where there is no reason to expect that there should be the same level of penalties because there will now be a legal path forward for digital asset businesses. In short, there is little reason to have confidence that there is any relationship between the amount of fines that the CFTC imposed and the severity of any actual violations.
This goes to the issue of the purpose of regulatory agencies. It is a mistake to believe that they exist primarily to collect fines, even if big penalties generate press releases and kudos from political figures. The purpose of regulatory agencies is to develop and maintain workable rules that allow businesses to provide value for society. When businesses violate those workable rules, then regulators should impose penalties that are proportionate to the violations, even if proportionality does not generate adoring headlines.
Related Articles
-
Senator Elizabeth Warren demanded that the CFTC turn over records on its oversight of cryptocurrency and prediction markets. The Senator alleged that the agency has been captured by the industries it regulates.