UPDATE 2-Rep Frank vows fight over GOP attack on Dodd-Frank

Thu Feb 10, 2011 5:06pm EST

Related Topics

* Frank: Dems will resist on SEC, CFTC budgets

* Frank: Concerned about consumer protection, derivatives

* Rep Neugebauer introduces bill on consumer bureau

* Senate panel sets Feb. 17 hearing on Dodd-Frank (Adds Neugebauer bill, comment; committee hearing)

By Kevin Drawbaugh

WASHINGTON, Feb 10 (Reuters) - Democrats will resist Republican attempts to weaken Dodd-Frank financial reforms through underfunding key U.S. regulatory agencies, Representative Barney Frank told Reuters on Thursday.

"We intend to make a fight," Frank, senior Democrat on the House Financial Services Committee, said in an interview as House Republicans agreed to pursue deep government spending cuts in the name of combating the soaring budget deficit.

"I'm worried that (committee Republicans) are complicit with the appropriators in underfunding the SEC and the CFTC. That's the biggest problem," Frank said.

The Securities and Exchange Commission and the Commodity Futures Trading Commission must implement and enforce scores of new rules under last year's Dodd-Frank legislation, approved in the wake of the 2007-2009 financial crisis.

Republicans opposed Dodd-Frank last year and have acknowledged they hope to weaken it by using their new-found power over the government's purse strings.

Last month, Republican Rep. Scott Garrett, chairman of the capital markets subcommittee, said that restraining funding for regulatory agencies would be one way "to throttle" portions of the Dodd-Frank bill.

Frank, whose name is on the legislation, was chairman of the financial services panel before Republicans won control of the House in November's congressional elections.

Two key components of Dodd-Frank call for new rules on the previously unregulated off-exchange derivatives market, and setting up a Consumer Financial Protection Bureau (CFPB) to shield consumers from predatory and abusive practices.

"I have some concern that they will try to undermine ... derivatives and the consumer protection," Frank added.

"I don't think there's much they can do about consumer protection. But they can underfund the CFTC and the SEC. Those are the two areas where I think they are most eager to weaken things and I think inaccurately."

Asked whether Democrats would be able to protect proposed budget increases for the SEC and CFTC, Frank said:

"I don't know about the funding. Obviously there is this overall concern about the deficit, but the amounts (for the agencies) are so small, I just don't know."

Republican Representative Randy Neugebauer said on Thursday he has introduced a bill to move the CFPB out of the Federal Reserve, where Dodd-Frank put it to bolster its independence, and into the Treasury Department.

Such a move would reduce the bureau's autonomy by putting its budget through the congressional appropriation process.

"Given the significant and perhaps over-regulating powers the CFPB has been given by the Obama administration, Congress must have a say on the appropriation of taxpayer money funding this agency's operation," Neugebauer said.

Top regulators, including Federal Reserve Chairman Ben Bernanke, will testify on Dodd-Frank on Feb. 17 to the Senate Banking Committee, still under Democratic control.

Bernanke will be joined by Federal Deposit Insurance Corp Chairman Sheila Bair, SEC Chairman Mary Schapiro, CFTC Chairman Gary Gensler and acting head of the Office of the Comptroller of the Currency John Walsh. (Additional reporting by Dave Clarke; editing by Carol Bishopric)

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