A US government shutdown is looming and politicians are hardly closer to averting it. If the shutdown went into effect, dozens of government agencies would be affected. But some of the most public-facing and time-sensitive agencies are the two financial market regulators—the Securities and Exchange Commission and the Commodity Futures Trading Commission—that make the wheels of US markets spin. If it’s anything like the shutdown that happened in 1995 to 1996, those agency would close their doors potentially for weeks, slamming the breaks on non-urgent government matters like processing IPO filings, investigating most financial crimes and passing the Dodd-Frank financial reform bill.
Without funding, these agencies would essentially run out of money, and any employee considered “non-essential” would have to go home, without pay. In practice, both agencies would likely operate with a skeleton staff, because certain employees would be needed to handle “emergencies involving the safety of human life or the protection of property,” in the words of a report released this week (pdf) from the Congressional Research Service. This means a minimum number of staff from both agencies would be around to ensure that markets continue to function and monitor the most egregious violations of securities law. That said, both agencies would be able to call more employees back to work in the event of a catastrophe.