The nation’s financial regulators are dealing with the impact of major staff reductions implemented by the Trump Administration, Investment News reports.
Agencies including the Securities and Exchange Commission, the Federal Deposit Insurance Corp., and the Office of the Comptroller of the Currency (OCC) are facing deep cuts in personnel. They are expected to lose over 2,300 employees as the result of layoffs, buyouts, early retirements and hiring freezes. It is part of an overall downsizing push aimed at saving at least $1 trillion in government spending.
At the SEC, for example, the commission’s workforce is being reduced by at least 500 staffers, approximately 10% of its 5,000 employees, who have taken buyouts or retirement offers. The SEC also fired the top directors at its ten regional officers around the nation and is terminating leases for regional offices in Los Angeles and Philadelphia. Advisers with DOGE, which is led by Elon Musk, came to the agency to look for further ways to cut costs.
According to InvestmentNews, various agencies are realigning their remaining staff members and adjusting their policies to maintain their regulatory functions. The OCC plans to combine supervision teams that were previously tailored to banks by size, and those familiar with internal discussions at the FDIC said that agency is rethinking its approach to supervision of the nation’s banks.
Some have raised concerns about the oversight of financial markets being weakened due to cutbacks in the numbers of examiners and investigators, particularly during a time of volatility in the markets.
Michele Alt, a former official at the OCC who is now a partner at the financial-services advisory firm Klaros Group., said “Overburdened and under-experienced staff could be unable to recognize brewing risks to the financial system.”
Despite the money saved by reducing agency headcount, there were warnings about the financial implications in the long run.
“While reducing staff might yield short-term cost savings, any near-term benefits are likely to be dwarfed by the long-term costs of weaker financial oversight, more reckless risk-taking, and more frequent bank failures,” said Jeremy Kress, a former Fed bank-policy attorney who now teaches business law at the University of Michigan.
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