WASHINGTON U.S. Senate appropriators approved major funding boosts for the country's financial market regulators on Thursday, setting up a likely battle with Republicans who want to use the power of the purse to slow down the 2010 Dodd-Frank Wall Street reforms.
The Senate Appropriations Committee's financial services spending package would set aside $308 million in fiscal 2013 for the Commodity Futures Trading Commission - an increase of about $103 million from its current $205 million budget.
The Securities and Exchange Commission would get a fiscal 2013 budget of $1.566 billion, or about $245 million above its current budget of $1.32 billion.
The funding bill was approved along party lines, in a 16-14 vote.
The SEC and CFTC are still collectively struggling to finalize new regulations required by the Dodd-Frank Act.
The law empowered the two agencies to jointly police the $708 trillion over-the-counter derivatives market. In addition, the SEC won more authority over hedge funds, municipal advisers and credit-rating firms.
But Republicans critical of the derivatives reforms have targeted CFTC funding as a tool to slow down their implementation. They have accused CFTC Chairman Gary Gensler of going beyond the scope of the law, and they have criticized the agency for lax oversight of futures brokerage MF Global, which collapsed in October.
"They are trying to do their job, but they are finding it hard because some people would rather just not give them any money," said Senator Dick Durbin, a Democrat who chairs the subcommittee with jurisdiction over SEC and CFTC funding.
He cited the trading of credit-default swaps as a trigger of the financial crisis and lamented efforts by Republicans to starve the CFTC of the funding to regulate the market.
"Come on! We were burned badly as a nation by this unregulated trading," he said.
Earlier this month, the two U.S. House appropriations subcommittees with jurisdiction over the SEC and CFTC budgets unveiled a very different vision for 2013 spending.
The CFTC, under the House plan, would get a 12 percent funding cut, or about a $25 million reduction in its budget. The SEC would get a $50 million boost, but there would be strings attached that would force the SEC to earmark $50 million toward information technology projects from the budget, instead of being able to tap a separate reserve fund.
Moreover, the House proposal contains language that would likely slow down money market fund reforms being championed by SEC Chairman Mary Schapiro by requiring the agency to conduct a study.
The study would examine the effectiveness of new rules for the industry that took effect in 2010 - regulations that some critics say already did enough to protect money market funds from experiencing problems like those seen in the 2007-2009 financial crisis.
Those funding proposals still await a vote by the full House Appropriations Committee.
Of the two agencies, the SEC has managed to escape the brunt of the efforts by Republicans to slash funding. This may be in part because the agency's budget is offset by industry transaction fees, and it does not contribute to the U.S. deficit.
Senator Jerry Moran, the ranking Republican of the appropriations panel with oversight of CFTC funding, opposed the proposed spending boosts for the financial market regulators on Thursday.
He said that most of his frustrations with the Dodd-Frank implementation process are with the CFTC.
"I strongly believe Chairman Gensler has failed to prioritize rule-making under Dodd-Frank," he said, saying that he has been "rebuffed" by Gensler at every turn to try to modify the CFTC's actions.
"My meetings with him personally have met with no success."
(Editing by Leslie Adler)