WASHINGTON Jan 14 Two of Wall Street's top
regulators are due to receive much smaller increases in their
budgets than they requested, potentially hobbling their ability
to police the markets for wrongdoing.
The $1.1 trillion spending bill unveiled by the U.S. House
of Representatives and Senate would allot the U.S. Securities
and Exchange Commission $1.35 billion for the fiscal year ending
Sept. 30, 2014.
The Commodity Futures Trading Commission, meanwhile, would
get $215 million for the remainder of the fiscal year.
Both budget numbers are well below the funding levels
requested by President Barack Obama, and represent very small
increases to their current spending levels, despite the new
responsibilities each have taken on after the financial crisis.
Since March 2013, all U.S. federal agencies have been
operating under tighter spending after across-the-board cuts
known as "sequestration" automatically kicked in.
As a result of sequestration, the SEC's fiscal year 2013
appropriation of $1.321 billion was slashed by $66 million down
to $1.255 billion, and the CFTC's $205 million budget was cut
down to $194.6 million.
The CFTC's cut was so significant that recently departed
CFTC Chairman Gary Gensler last October said the agency would be
forced to furlough workers.
The SEC was not forced to do furloughs, but it has since cut
back on hiring and travel in the wake of the cuts.
Of the SEC's new $1.35 billion spending level unveiled in
Monday's bill, $44 million would still need to be earmarked for
the agency's division that is in charge of conducting economic
analyses for its rules.
Problems with the quality of its cost-benefit analyses has
tripped up the SEC in the past, leading it to lose several court
challenges to its rules filed by industry groups.
Non-profit groups who lobby for strict regulations for Wall
Street lashed out at Congress, saying the spending bill woefully
underfunds the two agencies at a time when they need more
resources to implement the 2010 Dodd-Frank Wall Street reform
The law empowered the SEC and CFTC to take on new
responsibilities in the wake of the financial crisis, such as
overseeing over-the-counter derivatives.
"It is shameful that Wall Street's allies in Congress have
again failed to fund the very agencies that are charged with
protecting Main Street and preventing another financial crisis,"
said Dennis Kelleher, the president of Better Markets.
"This sets the agencies up to fail by asking them to do much
more than their budgets will allow."
Spokesmen for the two agencies did not have immediate
comments on whether the budget deal will be adequate.
However, CFTC Commissioner Scott O'Malia, a Republican, said
he appreciated the "modest increase" that Congress plans to give
"It is quite clear from this funding level that the
Commission will need to pick its funding priorities carefully,"
He added that he hopes the funds will help the CFTC conduct
its mission to enforce Dodd-Frank, improve its use of technology
and help prevent future furloughs of staff.
The $1.1 trillion spending bill will help prevent another
However, before that can be passed, lawmakers need to first
pass a three-day stop-gap funding bill ahead of a Wednesday
deadline for new spending authority.
(Reporting by Sarah N. Lynch; Editing by Chris Reese)