The President’s budget for Fiscal Year 2009 includes $130 million in funding for the Commodity Futures Trading Commission. What has the CFTC done to earn this dramatic growth in its funding? Has it proved especially effective at exercising oversight and ensuring integrity in the markets where it has jurisdiction?

Of course not. While the agency avoided embarrassments like the collapse of Amaranth last year, commodities futures markets are no cleaner or better run last year than the year before. But this presents no obstacle to additional funding. The private sector rewards success but in the government sector all too often failure is rewarded. According to government logic, failure indicates not a broken regulatory model but a “need” for additional resources. Thus this funding is intended to help the commission cope with the growth in futures markets, although the connection between market integrity and commission funding is assumed without evidence.

We gave up on this model with schooling. Failing public schools now risk losing funding, while improving schools can earn more funds. Yet somehow in market regulation, failure is still rewarded.

CFTC Applauds President’s Recommendation for Increased Agency Funding [CFTC Press Release]