December 20, 2013 / 9:31 AM / in 4 years

COLUMN-Demoralised U.S. commodities watchdog waits for new leaders: Kemp

(John Kemp is a Reuters market analyst. The views expressed are his own)

By John Kemp

LONDON, Dec 20 (Reuters) - The incoming chairman and new members of the U.S. Commodity Futures Trading Commission (CFTC) will inherit an agency that has been severely demoralised by overwork, defeats in court, infighting among the commissioners and severe criticism from the futures industry.

CFTC staff are among the least satisfied at any federal agency, according to “Best Places to Work in the Federal Government 2013,” the influential annual rankings compiled by the Partnership for Public Service from the Office of Personnel Management’s Federal Employee Viewpoint Survey.

In total, 374,000 permanent employees across the federal government participated in the survey, which was conducted between April and June, and has been run every year since 2003.

The CFTC ranked 59th out of a total of 71 agencies for employee satisfaction and commitment, with an overall score of just 56.6 out of a possible 100 (

The CFTC’s performance is actually worse than the raw statistics suggest, because staff at small agencies like the commodity-futures regulator, tend to express higher job satisfaction than medium-sized and large agencies.

The CFTC’s results are therefore doubly disappointing. Its rankings look more like those for a large agency rather than a small one, even though the commission has well under 1,000 full-time staff.

The CFTC’s overall satisfaction and commitment index was almost 10 points lower than the median score for small agencies, which is 66.4.

In contrast, mid-sized agencies had an average score of 62.8 and large agencies 59.3, according to the rankings published on Wednesday.

The comparable index score in the private sector is 70.7, according to Hay Group.

The CFTC’s dismal performance puts it behind other economic regulators like the Federal Energy Regulatory Commission (71.6) and the Securities and Exchange Commission (58.7), even though they both employ more staff.

For comparison, the most satisfied and engaged federal workers were those at the Surface Transportation Board, a tiny agency regulating railroad tariffs.

Bank supervisors at the Federal Deposit Insurance Corporation were the most satisfied among mid-sized agencies, while the National Aeronautics and Space Administration had the most engaged employees for a large agency.

Spies were pretty satisfied too (or perhaps they thought the results wouldn’t really be confidential and someone might hack into the results). The intelligence community had an overall satisfaction index of 67.3, ranking among the most-satisfied of large agencies.


CFTC staff were not always this demoralised. The satisfaction and engagement score has plummeted from around 75 points in 2009, 2010 and 2011 to 69.6 in 2012 and 56.6 in 2013.

Employee satisfaction has fallen across the federal government as the sequester and compulsory furloughs have taken their toll.

But while average federal employee satisfaction dropped by the 3 points, engagement at the CFTC fell by a massive 13 points in 2013. The CFTC has seen one the steepest declines in overall satisfaction for any agency.

The CFTC’s overall index placed it 24th out of 29 small agencies. The agency scored well below average in 11 out of the 13 categories tested in the survey.

But it fared especially poor in strategic management (26th out of 28 agencies assessed separately in this section); employee skills-mission match (24th); pay (24th); training and development (24th); teamwork (23rd); effective leadership and empowerment (23rd); and work-life balance (22nd).

It ranked modestly better when employees were asked about the effectiveness of senior leaders (20th) and the agency’s commitment to fairness (13th), though more employees were satisfied with their immediate supervisor (11th).

Again, it was not always this way. The CFTC scored well-above the small-agency average between 2009 and 2011 in all these categories, before a precipitous decline set in.

For example, on strategic management, the area where the agency now ranks worst, the agency scored almost 70 points in 2010, sliding to just 49.9 in 2013.

The same abrupt slide is visible in most other components of the survey.

So what has gone wrong?


The Dodd-Frank Wall Street Reform and Consumer Protection Act has led to an enormous increase in the agency’s workload but there has been no corresponding increase in budget or staffing levels.

The lack of resources is not accidental. Having lost the battle in Congress over the Dodd-Frank Act, Wall Street banks and brokers have been trying to thwart the regulatory revolution by starving the agency of funds to meet its new responsibilities - insisting it must do more with the same money and staff.

Wall Street has enforced the funding squeeze by working with its allies in the congressional Republican Party, which holds a majority in the U.S. House of Representatives, to block the agency’s requests for more appropriations.

As a result of changes stemming from Dodd-Frank, the CFTC has finalised 68 new rules, orders or pieces of guidance in just three years, taken into account more than 60,000 comments from the industry and the public, and held more than 2,200 meetings and 21 public roundtables, according to Chairman Gary Gensler.

It also grappling with new responsibilities to collect data on, monitor and regulate over-the-counter swaps and other derivatives which previously fell outside its remit.

Yet the CFTC is only 5 percent larger than it was 20 years ago, according to Gensler, even though its responsibilities and the markets it oversees have grown exponentially.


The Dodd-Frank Act propelled the CFTC from an obscure backwater into one of the highest-profile financial regulators in Washington. Gensler has embraced that role enthusiastically.

But it has also made the agency, and its chairman, a lightning rod for criticism from the derivatives industry. For the chief of a small agency, Gensler has had a remarkably high profile and been regularly pilloried in both the specialist media and the popular press.

How much of this is fair is a question for history to judge. Much of the criticism levelled at the CFTC and its tough chairman should really be directed at the underlying statute, which was approved by elected representatives in both houses of Congress in 2010.

Perhaps Gensler could have been more emollient, but the industry’s attempt to nullify the law through the rule-writing process would have tested the patience and interpersonal skills of even the softest and most well-disposed regulator.

Gensler’s centralised leadership style has also drawn complaints from fellow commissioners, and pleas for more collegiality, but it is not clear a more inclusive approach would have made much difference.

Moreover, Gensler has been chairman since May 2009. CFTC staff were more satisfied than most small-agency employees in 2009, 2010 and 2011, the first three years of his tenure; it is only in 2012 and 2013 that satisfaction has plunged.

In practice, satisfaction seems to have plunged because the agency has been caught in the post-Dodd Frank maelstrom, unable to please everybody, and left to struggle on with inadequate resources, while facing attacks from all sides.

The result is that it has been subject to a torrent of criticism from the industry and had its rule-writing repeatedly picked apart by hostile lawyers and lobbyists.

The agency’s bid to impose position limits has run into a storm of protest and been invalidated by a federal court, with much uncertainty about its legal strategy.

In the circumstances, the collapse in morale is not surprising. But again, the conflict was probably unavoidable. Writing effective new rules was never going to be popular.

The industry opposed the passage of Dodd-Frank in the first place, and still sees it as unnecessary and counterproductive. In some ways, Gensler and the staff have been the victims for the reform process, absorbing the flack.

But now the process is largely complete and Gensler is stepping down at year-end, the challenge for the new chairman and two new commissioners, when they are finally confirmed by the Senate, is to rebuild bridges with the industry and the staff.

The CFTC did not reply to a request for comment on this article. (Editing by William Hardy)

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