WASHINGTON (Reuters) - President Barack Obama’s proposed budget for fiscal 2012 includes $308 million for the Commodity Futures Trading Commission, up 82 percent from the regulator’s current spending level, two sources with direct knowledge of the number said on Friday.
But House Republicans looking to slash government spending want steep cuts at the CFTC, in a bid to starve it because of its lead role in implementing Dodd-Frank financial reforms. The CFTC is one of the focal points of anticipated bitter partisan fights over funding.
Late on Friday, House appropropriators said they wanted to slash $56.8 million or 34 percent from the CFTC’s current funding of $168.8 million for 2011, which would mean drastic cuts for the rest of the fiscal year.
Congress has to agree by March 4 on continuing funding for the government for fiscal 2011, which ends September 30. Obama and the Democrats who control the Senate are certain to oppose the House plan.
The chronically underfunded CFTC will begin policing the massive over-the-counter derivatives market later this year, worth about $600 trillion globally.
Under new regulations, banks and other large traders will have to clear their swaps -- bilateral deals blamed for accelerating the recent financial crisis -- and trade them in more transparent platforms.
The CFTC has said it needs to hire more people and modernize its technology to watch over the massive market.
But it is struggling under current funding restraints. It had sought a 50 percent hike for 2011, and the Obama budget -- to be released on Monday -- seeks an even bigger increase.
Michael Dunn, a Democratic commissioner, said last month the CFTC is facing a ”budget crisis.
“In essence, we face an unfunded mandate -- a situation where the CFTC has been given enormous responsibilities, without the corresponding increase in resources necessary to fulfill them,” Dunn said at a hearing.
But Republicans in Congress have questioned the need for regulatory funding hikes, and have questioned whether the CFTC is overreaching through some of its proposals.
House Capital Markets Subcommittee Chairman Scott Garrett told Reuters in January that budget restraint is just one way Republicans are trying to “throttle” parts of Dodd-Frank.
Reporting by Roberta Rampton and Christopher Doering; Editing by Richard Chang