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New Independence for Five Watchdogs?

By Ed O'Keefe

The House is expected to vote next week on a proposal granting greater independence to watchdogs at the nation's five federal agencies managing financial and commodities markets.

Rep. John B. Larson (D-Conn.) introduced the bill, which would elevate the IG offices at the Board of Governors of the Federal Reserve System, Commodity Futures Trading Commission, the National Credit Union Administration, the SEC, and the Pension Benefit Guaranty Corporation.

"I can think of no sector where honesty, independence and transparency are more needed right now than our financial and commodity markets. We must give these inspectors general the tools they need to do their jobs," Larson said.

This week's semi-annual Congressional report from the CFTC's inspector general confirmed Larson's instincts: Watchdogs completed just two investigations between October 2008 and March 2009, despite the economic downturn and the agency's mandate to regulate highly complex financial futures contracts.

Investigators at the five regulatory agencies are "non-independent" offices (or a "Section 8G" in the original IG Act). Larson's bill elevates them to independent, or "established" status, on par with IGs at 32 other federal agencies.

A review of IG reports by Larson's office found that on average, independent offices completed 117 investigations in 2008, while non-independent offices completed 12.

Larson's bill, while confined to five regulatory agencies, comes amid reports of interference with independent investigations at other agencies: Sen. Charles E. Grassley (R-Iowa) has accused top officials at the Library of Congress with admonishing investigators for the tone and focus of their investigations and his office is investigating similar allegations at other agencies.

By Ed O'Keefe  | June 5, 2009; 11:00 AM ET
Categories:  Congress, Oversight  
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