| WASHINGTON, March 4
WASHINGTON, March 4 The White House on Tuesday
asked Congress to ramp up funding for the U.S. securities
regulator, but caused an outcry from the top derivatives
regulator by scaling back its prior request for a boost for that
President Barack Obama proposed a fiscal year 2015 budget
for the Securities and Exchange Commission of $1.7 billion, and
a budget for the Commodity Futures Trading Commission of $280
million. The new fiscal year begins on Oct. 1.
Although both of these requests still constitute increases
from current funding levels for the two Wall Street regulators,
the White House had previously sought $315 million for the CFTC
for fiscal year 2014, or $35 million less than this year's
The funding request for the SEC, by contrast, went up
slightly, from $1.67 billion for last fiscal year to $1.7
billion this coming fiscal year.
"Our staff is on its knees, some reaching for the exit doors
and others already having bailed. Employee morale is the lowest
I've witnessed," said CFTC Democratic Commissioner Bart Chilton.
"Yet, the president's budget request would fund 100 less
employees than we need, 100 less than he requested last year."
"I'm frustrated to say the funding requested is insufficient
to do the job," he added.
The 2010 Dodd-Frank Wall Street reform law vastly expanded
the CFTC's and the SEC's powers. Both agencies were tasked with
regulating the over-the-counter derivatives market, with the
CFTC given the lion's share of the responsibility.
The SEC also won new authority to regulate private funds
like hedge funds and private equity funds, as well as municipal
advisers and credit-rating agencies.
The SEC has typically been a higher profile agency,
overseeing the behavior of all publicly traded companies, and
bringing headline-grabbing cases involving insider trading,
accounting fraud and bribery.
The CFTC, however, has seen its stature rise since the
financial crisis, which laid bare the risks of derivatives and
other complex financial instruments that the agency oversees.
Questions about the CFTC's proposed budget for fiscal 2015
are likely to surface on Thursday, when the agency's acting
chairman, Mark Wetjen, appears before a U.S. House of
Representatives appropriations panel.
The president's budget request is not expected to be
adopted, and is largely a symbolic gesture of the White House's
The Republican-controlled House is expected to unveil its
own more conservative budget later this year. The Democratically
controlled Senate, meanwhile, has said it has no plans to pass a
budget this year.
That's because the House and Senate already struck a
two-year budget deal in December to cover 2014 and 2015 budget
Still, the White House's proposal to scale back its funding
request for the CFTC could open it to further criticism that the
agency is not being properly prioritized.
Since Obama took office, the agency has already faced two
major scandals - the collapse of futures brokerages MF Global,
run by former New Jersey Democratic Senator Jon Corzine, and
Peregrine Financial Group, a mid-sized firm whose founder
defrauded its customers for nearly two decades and is currently
serving a 50-year prison sentence.
Under the recent congressional deal, the SEC and CFTC both
got slight budget increases for this fiscal year. Currently, the
SEC is operating under a $1.35 billion budget, and the CFTC is
funded with a $215 million budget.
Still, many critics have said those figures are woefully
inadequate for the two agencies to do their job and keep pace
with Wall Street.
Despite the White House's reduced funding request for the
CFTC, the fiscal 2015 budget does contain a proposal for new
legislation that would permit the CFTC to charge transaction
fees on futures, swaps and options.
Doing so would put the agency more in line with the SEC's
budget structure, in which its expenses are offset by industry
fees. As a result, the funding does not impact the federal
Chilton, however, said this proposal is nothing more than
"old smoke and mirrors" and not truly "genuine."