House panel votes for 15 pct cut in US CFTC budget

Tue May 24, 2011 7:17pm EDT

* White House asked for large increase for CFTC

* Democrats say cuts will stymie regulation of OTC swaps

* GOP says U.S. agencies have money for core missions

* Bill could be cleared next week for floor vote

WASHINGTON, May 24 (Reuters) - The U.S. futures regulator will see a 15 percent cut in funding under a bill approved by a House subcommittee on Tuesday despite objections it will prevent regulation of the vast market in over-the-counter derivatives.

The Republican-controlled panel approved the bill on a voice vote. The bill, which covers fiscal 2012 funding for the Agriculture Department and related agencies, could be cleared next week by the full Appropriations Committee for a floor vote.

"If ever there was a place not to cut, it is regulation of Wall Street," said Sam Farr, the Democratic leader on the subcommittee. Fellow Democrat Marcy Kaptur said she may try next week to boost funding for the Commodity Futures Trading Commission.

The CFTC would get $172 million under the panel-approved bill, a $30 million cut from this fiscal year, which ends Sept. 30. The administration says CFTC needs a hefty increase in staff and equipment so it can regulate swaps, as required by the 2010 financial reform law.

Farr said afterward that he was skeptical the Republican-run House and Democrat-controlled Senate can agree on spending bills. Each has sharply different views on where and how much to cut spending. Farr said the result could be another year of stopgap spending bills.

Subcommittee chairman Jack Kingston said the $125 billion bill, a $300 million increase from this year, provides enough money for agencies to carry out their core missions. Cuts were made in many agencies as part of fiscal austerity.

The CFTC has proposed four dozen rules to implement the reform law but says it will miss the initial deadline to put them into effect.

House Republican leaders have proposed a delay until late 2012 in implementing the law. They say it will prevent errors in hasty rule-writing. Their opponents say the financial meltdown of 2008 shows the need for prompt regulation. (Reporting by Charles Abbott)

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