combining them could have created a power struggle between their congressional overseers, pitting farm state lawmakers who speak the language of pork bellies and corn bushels against East Coast senators who talk stocks and bonds.
By sidestepping the merger issue, the administration avoids a political turf war that threatened to slow efforts to regulate the kind of financial products that caused the collapse of American International Group (AIG, Fortune 500).
CNN Money further observes that
politics comes into play when you look beyond the two agencies and consider the congressional committees that control and fund them.
The SEC answers to the House Financial Services and Senate Banking committees.
The CFTC, originally created to regulate agricultural financial products, answers to the agricultural committees on Capitol Hill — even though agricultural futures are less than 15% of what the CFTC now deals with.
Most veteran congressional watchers say a merger would give the banking committees more power, while the agricultural committees would lose power. The agricultural panels don’t like that idea much.