UPDATE 1-House panels OK spending curbs for US market regulators
* House panel seeks to slash CFTC funding by 12 pct
* Second panel votes for only a $50 million increase for SEC
* Republicans say CFTC does not deserve budget boost
* Democrats critical of proposed budgets for regulators
* Republicans also seek money market fund study by SEC
By Charles Abbott and Sarah N. Lynch
WASHINGTON, June 6 (Reuters) - Two U.S. House Appropriations panels on Wednesday took aim at the budgets of the country's leading financial market regulators, voting to slash spending for one agency and only marginally boost funding for the other.
The Commodity Futures Trading Commission would get a 12 percent budget cut for fiscal 2013, from $205 million to $180.4 million in an agriculture funding bill approved by one House Appropriations subcommittee.
The Securities and Exchange Commission, meanwhile, would see its budget rise by $50 million, from $1.32 billion to $1.37 billion under a financial services spending package approved by another House Appropriations panel.
Despite the increase, the SEC's budget would still come with some strings attached. It would be forced to earmark $50 million toward information technology projects from the budget, instead of being able to tap a separate reserve fund.
The proposed budgets for the SEC and CFTC are well below the spending levels advocated by the Obama administration, which has called for large funding boosts to help the agencies implement sweeping new reforms required by the 2010 Dodd-Frank Wall Street overhaul law.
"The CFTC's hardworking staff is just 10 percent more in numbers than at our peak in the 1990s, yet Congress has now directed the agency to oversee the swaps market that is eight times larger than the futures market," CFTC Chairman Gary Gensler said.
Republicans critical of Dodd-Frank have been seeking to use the power of the purse as a way to delay implementation of some of the new regulations. But Democrats have balked at the proposed cuts, saying the recent $2 billion losses at JP Morgan and the bungled Facebook initial public offering demonstrate the need for greater funding and resources.
On Wednesday, Democrat Rosa DeLauro sought to win support for an increase that would bring the CFTC's budget to $308 million. Her plan was defeated by the subcommittee on an 8-5 party-line vote. She vowed to bring the issue up again when the full House Appropriations Committee takes up the CFTC budget in mid-June.
Jack Kingston, the subcommittee's chairman, cited the CFTC's poor oversight of collapsed brokerage firm MF Global and its slow implementation of new rules in rejecting a proposed increase.
"They were asleep on the job," said the Georgia Republican.
Republicans also took the opportunity on Wednesday of using the spending package as a way to possibly delay other pending new SEC regulations for money market funds that they oppose.
The financial services spending bill would require the SEC to conduct a study on money market funds and the effectiveness of new rules for the industry that took effect in 2010.
The provision was added as SEC Chairman Mary Schapiro continues her quest to impose additional rules on the fund industry.
Schapiro has said the SEC is looking at several options, including possibly a capital buffer coupled with redemption hold-backs, or a floating net asset value.
But the fund industry along with three of the SEC's five commissioners have voiced opposition to her proposals, saying the new regulations implemented in 2010 as a response to the financial crisis were enough to stabilize the money market fund industry.
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