Futures Trading and SEC fighting Congress for financing

The CFTC and SEC are intended to be the financial police officers of the economy. Wall Street got a newly empowered police force in 2010, with the passage of the Dodd-Frank Act. The financing to carry out these tasks, however, is caught in the cross hairs of the Congressional budget fight.

Regulating the financial system

The 2010 Dodd-Frank Act was intended to increase oversight of the financial system to prevent another collapse. Increased funding to keep that up was requested from both agencies. In 2010, the SEC received $1.1 billion in funding. The agencies have asked for millions more for the fiscal 2012 year. The reason would be to get 1,000 new employees added on.

Obama wants a financing increase

In the initial 2012 budget Obama proposed, the Commodity Futures Trading Commission and Securities and Exchange Commission were set to receive additional funding, mostly from fees on the trades. Funding would have been given for additional oversight from the $583 trillion derivatives sector. This would end up in $117 million per-trade fees every year. Even more funding would have come from the federal government. It would mean an extra $300 million for the agencies in oversight funding.

Financing unlikely with new spending budget

Though Obama’s proposed budget fully funds both regulatory agencies, the comprehensive budget Republicans has proposed not only strips that financing, it reduces funding of the agencies further. The cost of the Dodd-Frank regulations will be discussed by a House panel on March 30. The spending budget might already be in place by then though. If the current Republican-supported comprehensive budget bill passes, the Commodity Futures Trading Commission would need to reduce its staff by more than 200, and the Securities and Exchange Commission would need to cap the number of experts employed. Legislators say the fear is that “overly strict implementation” of financial regulation will harm the ongoing economic recovery.

Articles cited

CNN

money.cnn.com/2011/03/01/news/economy/sec_cftc_funding/index.htm

Wall Street Journal

online.wsj.com/article/SB10001424052748703584804576144222589096178.html

Washington Independent

washingtonindependent.com/91650/senate-passes-landmark-financial-regulatory-reform-bill

Reuters

reuters.com/article/2011/02/28/us-finance-summit-neugebauer-idUSTRE71R7B920110228