WASHINGTON Securities and futures regulators will see large budget increases to help them implement sweeping new financial regulations under a bill approved by the Senate Appropriations Committee on Thursday.
The plan, which will now go to the full U.S. Senate for a vote, would give the Securities and Exchange Commission a fiscal 2012 budget of $1.407 billion, an increase of roughly 19 percent from its current fiscal 2011 budget of $1.185 billion.
The Commodity Futures Trading Commission would also see an estimated 19 percent increase in its funding, jumping from $202 million to $240 million for fiscal 2012, which starts on October 1.
"When it comes to the SEC and CFTC, they maintain the integrity of major markets in the United States and other countries," said Sen. Richard Durbin, who chairs the Senate Appropriations subcommittee that funds the two agencies.
The budget boosts would help the SEC and CFTC undertake the major new responsibilities they have inherited under the Dodd-Frank Wall Street overhaul law, which was enacted last year.
That law splits oversight of the nearly $600 trillion over-the-counter derivatives market between the two regulators, and also gives the SEC greater authority to police hedge funds, credit-rating agencies and municipal advisers.
The fate of funding for the two agencies, however, remains uncertain.
House Republicans who are worried about major Dodd-Frank provisions have generally opposed bolstering the budgets for the SEC and CFTC. Earlier this year, the House passed a bill that would cut the CFTC's budget down to $171.9 million. House appropriators also approved a measure to keep the SEC's funding flat, although it has not faced a full House vote yet.
Some lawmakers have been reluctant to support the CFTC funding boost because some feel its chairman, Gary Gensler, has been "too aggressive" in how he has gone about implementing the new derivatives rules.
"In my view the CFTC has failed to prioritize its rulemaking under Dodd-Frank, proposing unnecessary discretionary rulemaking that is not required by the act and will increase the staffing and funding demands," said Jerry Moran, the top Republican on the subcommittee that overseas the SEC and CFTC.
The argument for a boost to the SEC's budget has been somewhat easier, by contrast, in part because a provision in Dodd-Frank will require the SEC to off-set the money Congress appropriates with the fees it imposes on the firms it regulates.
Despite strong opposition from many House Republicans, one key lawmaker earlier on Thursday signaled possible support for an SEC budget boost, in a move that could help fuel future negotiations.
House Financial Services Chairman Spencer Bachus, who recently circulated a legislative proposal aimed at restructuring the SEC, acknowledged that an "increase in funding is probably necessary as part of the reform process." Still, Bachus would like to see the reforms completed before agreeing to any budget boost.
At a House Financial Services hearing on Thursday, SEC Chairman Mary Schapiro assured lawmakers the agency is already working toward improving its operations internally.
She urged the lawmakers to raise the SEC's budget, or else the agency might not be able to bring cases due to litigation costs or effectively examine clearinghouses for new derivatives regulations.
"That will result in a lack of oversight, and frankly, uncertainty for the industry," she said.
(Reporting by Sarah N. Lynch and Christopher Doering; Editing by Gary Hill, Bernard Orr)