Futures Trading and SEC fighting Congress for funding

The 2012 budget could possibly strip financing from financial reform regulations. Image: Flickr / MoneyBlogNewz / CC-BY

The Commodity Futures Trading Commission and Securities and Exchange Commission are supposed to be the financial police officers of the economy. The 2010 Dodd-Frank Act was meant to increase the power of these agencies to protect consumers and keep an eye on Wall Street. The funding to carry out these tasks, however, is caught in the cross hairs of the Congressional budget fight.

Policing the financial system

The 2010 Dodd-Frank Act was intended to increase oversight of the financial system to prevent another collapse. Both agencies have requested increased funding in order to carry out these new responsibilities. In 2010, the Securities and Exchange Commission received $1.1 billion in funding. For fiscal year 2012, the two agencies have requested several hundred million more in funding in order to hire more than 1,000 new staffers.

Obama’s proposed increase in funding

In the initial 2012 budget President Obama proposed, the CFTC and SEC were set to receive additional funding, mostly from fees on the trades. The $583 trillion derivatives market would end up paying $117 million in per-trade fees each year in order to fund additional oversight. The federal government would also be responsible for an additional $300 million in oversight funding to the agencies.

Comprehensive budget strips funding

Though Obama’s proposed budget fully funds both regulatory agencies, the comprehensive budget Republicans have proposed not only strips that funding, it reduces funding of the agencies further. A House panel is scheduled to hold hearings on the cost of implementing Dodd-Frank regulations on March 30, but by then the budget could be set. If the current Republican-supported comprehensive budget bill passes, the CFTC would need to reduce its staff by more than 200, and the SEC would need to cap the number of experts hired. Legislators say the fear is that “overly strict implementation” of financial regulation will harm the ongoing economic recovery.