Regulatory Shrinkage: Departure of Two Commissioners Leaves CFTC with a Two-Member Staff
**CFTC Faces Operational Challenges with Two Commissioners**
The Commodity Futures Trading Commission (CFTC) is set to face significant operational challenges following the upcoming departures of Commissioners Christy Goldsmith Romero and Summer Mersinger, leaving the agency with only two members.
In its current state, the CFTC, unlike the NCUA, does not have a specific rule about the number of members from the same political party. However, by statute and regulatory practice, the Commission requires at least three commissioners for a quorum to conduct official agency business. Consequently, with only two members, the Commission would be unable to carry out most of its core functions.
The lack of a quorum would mean no official decision-making or formal rulemaking could take place. Any pending or new regulatory initiatives would be put on hold until at least one new commissioner is confirmed and seated. The agency might still perform routine oversight and staff-level work, but it would be severely limited in its ability to address emerging risks, respond to market disruptions, or adapt to evolving financial market conditions.
The CFTC heavily relies on advisory committees, such as the Market Risk Advisory Committee (MRAC), for expert input on complex issues affecting derivatives markets. While these committees can continue to function and provide recommendations, the Commission itself would not be able to act on those recommendations until it regains a quorum.
Historically, the CFTC operates with a bipartisan structure, and actions often do not break down neatly along partisan lines. However, the absence of a full complement of commissioners could undermine the intended balance and collaborative approach of the agency.
**Summary**
| Scenario | Outcome for CFTC | |-------------------------|-------------------------------------------------------------------------------------------------------| | Only 2 commissioners | No quorum: no official meetings, rulemaking, or enforcement actions possible | | Routine work | Limited to staff-level activities; no commission-level decisions | | Advisory committees | Can continue to meet and advise, but no commission action on their recommendations | | Bipartisan collaboration| Stalled or paused until new commissioners are confirmed |
**Bottom Line**
A two-member CFTC is effectively paralyzed in terms of its core regulatory and supervisory functions. Only staff-level activities and advisory committee meetings can continue, but no formal or official agency actions are possible until at least one more commissioner is appointed and confirmed, restoring the necessary quorum.
Commissioner Christy Goldsmith Romero, who is most proud of the CFTC's work to "strengthen customer protection and market integrity," will retire from federal service on May 31, 2023. Commissioner Summer Mersinger, who has been praised by the Blockchain Association as the ideal leader to take the organization and the industry to new heights, will leave the CFTC at the end of May 2023 and become the chief executive of the Blockchain Association. Mersinger's departure from the CFTC is effective June 2, 2023.
The CFTC's current commissioners, excluding Brian Quintenz (if confirmed), are all appointed by the Biden administration and served since 2022. Quintenz, a CFTC veteran and former agency employee, is expected to lead the CFTC, but his confirmation is pending. If the Senate fails to confirm a chairman, the commission votes to select one of the commissioners as acting chairman.
The NCUA board, on the other hand, can continue with its usual supervisory and enforcement duties with one member, but cannot vote to implement policy changes or approve new enforcement actions without a quorum of two members. This was evident in 2017 when President Donald Trump fired the two Democrats from the NCUA board, leaving the agency with no quorum and just one board member: Republican Chair Kyle Hauptman.
The CFTC can still operate with a quorum of two members, but matters that require a vote, like approving the agency budget or enforcement actions, can be stalled if the two members cannot agree. This could potentially lead to delays and inefficiencies in the agency's operations.
- The operational challenges facing the CFTC with only two commissioners mean that official decision-making, rulemaking, and enforcement actions would be on hold until at least one new commissioner is confirmed and seated, impacting the commission's ability to address finance-related business issues, politics, andgeneral news.
- The CFTC's advisory committees, such as the Market Risk Advisory Committee (MRAC), can still provide expert input on complex issues affecting derivatives markets while the commission is under-staffed, but the commission itself would be unable to act on those recommendations until it regains a quorum, potentially stalling the collaboration and balance intended in its bipartisan structure.
