* SEC fiscal 2012 budget up 28 pct under Obama plan
* CFTC would see budget up 82 pct to $308 million
* House Republicans have proposed cuts to both agencies
* Republicans bash proposed CFTC user fees
(Adds details on budget and proposed new staffing levels)
By Sarah N. Lynch and Christopher Doering
WASHINGTON, Feb 14 The White House proposed on
Monday large funding increases for U.S. market regulators, a
move already coming under fire from Republicans who oppose key
provisions in the Dodd-Frank financial reform law.
The Obama administration's fiscal 2012 budget proposes
giving the Securities and Exchange Commission a 28 percent
funding increase to $1.427 billion compared to fiscal 2010's
actual spending levels. That includes an additional $20 million
the SEC could spend out of a new emergency account that would
be funded by registration fees.
The Commodity Futures Trading Commission would see an 82
percent spending jump to $308 million, but $117 million of that
total would be offset through a user fee on financial firms
that is unlikely to draw support in Congress.
"The so-called user-fees would be one more tax to drive up
the cost of main street businesses," said Republican
Congressman Scott Garrett, the chairman of a House panel
overseeing the implementation of new derivatives regulations.
"They represent one more end-around to attempt to grow
government even more, and done in this way, it would be outside
the traditional congressional appropriations process."
INSIDER: Brookings' Doug Elliott on funding
Take a Look-Obama's 2012 budget [ID:nN11152338]
Dodd-Frank was enacted last year in response to the
2007-2009 financial crisis, drawing support almost exclusively
U.S. regulators have said they will need more funding to
write and enforce dozens of rules required by Dodd-Frank,
including authority to oversee the $600 trillion
over-the-counter derivatives market as well as hedge funds and
private equity funds.
Republicans who now control the House of Representatives
have questioned funding boosts for regulatory agencies as they
look to cut government spending and seek to throttle
enforcement of Dodd-Frank by starving regulators of additional
Congress did not enact a 2011 budget before the November
elections, leaving government budgets frozen at 2010 levels.
Congress has to agree by March 4 on continuing funding for the
government for fiscal 2011, which ends Sept. 30.
Republicans proposed late on Friday cuts to spending for
the remainder of the current fiscal year, with the CFTC hit
House appropriators said they wanted to slash $56.8 million
from the CFTC's current funding of $168.8 million for 2011,
while the SEC's would be lowered $25 million from the current
level of $1.1 billion.
The Republican plans have drawn the ire of Democrats,
including Barney Frank, the top Democrat on the House Financial
Services Committee and co-author of Dodd-Frank.
Frank told Reuters last week he thinks withholding funding
from the SEC and CFTC will fuel public anger, and possibly put
pressure on Congress to come through with the money. "I think
ultimately, both agencies will be funded," he said.
The budget freeze has begun to affect day-to-day operations
at the agencies, forcing them to curb travel for employees and
delay hiring staff.
Obama's proposal would let the SEC hire a total of 780 new
staffers, 468 of which would be tasked with implementing
Dodd-Frank provisions. The CFTC, meanwhile, would be able to
hire 238 full-time staffers to implement Dodd-Frank and another
78 to carry out its remaining responsibilities.
On Monday, several key regulators including SEC Chairman
Mary Schapiro and CFTC Commissioner Bart Chilton lauded the
"These funds will provide the SEC with the resources needed
to carry out both our longstanding core mission as well as our
new responsibilities for derivatives, hedge fund advisers and
credit rating agencies," Schapiro said in a statement. Chilton
added in an interview with Reuters that the budget presents an
"admirable equilibrium" that shows fiscal restraint while still
giving regulators much-needed resources.
The SEC, through fees it charges the securities industry,
has consistently been a net contributor to the government's
coffers, but Congress has set its annual budget.
A provision in Dodd-Frank requires the SEC to adjust fees
it charges on securities transactions so they will offset the
amount Congress appropriates starting in 2012. That means its
budget would not add to the U.S. deficit.
Still, not all regulators appeared happy on Monday with the
president's plan. CFTC Commissioner Scott O'Malia, a
Republican, said he opposes a user fee. He also said he is
concerned the budget focuses too much on hiring new staff
instead of putting the money into much-needed technology
(Reporting by Sarah N. Lynch and Christopher Doering; Graphics
by Emily Stephenson; Editing by Tim Dobbyn)