When it forecast its spending needs for the current fiscal year, the Commodity Futures Trading Commission did not foresee this year's explosion in the trading of futures contracts that required the agency to increase spending on data processing and surveillance.
The agency was nearly broke. It cut its travel budget to the bone. Its administrative law judges no longer went to a city to hear a lone complaint.
The CFTC, which oversees the industry that trades futures contracts in such diverse areas as corn, Treasury bills and stock indexes, also put a hold on most hiring.
The White House was no help, but no hindrance either. The Office of Management and Budget, normally adamantly opposed to additional appropriations, took a neutral position on the CFTC's quest for more money.
Congress appears to have come to the financial rescue. A House-Senate conference committee has approved giving the CFTC a supplemental appropriation of $965,000.
In some respects, however, the agency was a victim of its own willingness to approve vast numbers of new futures contracts for trading on the nation's futures exchanges.
"You'd think they might have foreseen their money needs when they went on a contract binge," said one lawyer who follows the agency. AVOIDING A SQUEEZE . . . The CFTC apparently negotiated its way through its first potential market "squeeze" in several years.
A squeeze occurs when outstanding contracts require delivery of a larger quantity of a commodity than exists.
The potential squeeze was in the corn contracts that matured July 20 on the Chicago Board of Trade.
A week before that expiration date, there were contracts outstanding that required the delivery of more than 25 million bushels of corn. Less than 10 million bushels were available.
The country isn't short of corn.
But the corn wasn't at the delivery points required by the Chicago Board contracts.
Most futures contracts are settled with cash rather than delivery of the commodity. But when it became apparent that there was less corn available, many "longs"--those with contracts that called for delivery of 5,000 bushels of corn on July 20--held their contracts rather than selling them.
That drove up the price of corn as traders realized there might not be enough corn to satisfy the contracts. But officials of the Chicago Board as well as the CFTC pressured the "longs" to sell their contracts before the expiration date.
By July 20, most contracts were liquidated, albeit grudgingly, and a squeeze was averted. MORE ON USER FEES . . . This week the CFTC will consider a proposal to establish some fees and increase others for services the agency provides.
Higher revenues from fees would not help the CFTC's budget, since the income would go to the Treasury rather than the agency.
But the administration is likely to smile on an agency that covers some of its costs by collecting from those who benefit from its services.
The commission will look at new fees for registration by brokers as well as for copies of commission documents and for computer searches.