Business World

Monday 24 July 2017

Obama budget beefs up funds for US market regulators

President Barack Obama speaks about the budget during his visit to Parkville Middle School and Center of Technology in
Parkville, Maryland, yesterday. On right is Office of Management & Budget (OMB) director Jack Lew
President Barack Obama speaks about the budget during his visit to Parkville Middle School and Center of Technology in Parkville, Maryland, yesterday. On right is Office of Management & Budget (OMB) director Jack Lew

Sarah Lynch and Christopher Doering

THE White House yesterday proposed large funding increases for US market regulators, a move likely to come 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 (SEC) a 28pc funding increase to $1.427bn, compared with fiscal year 2010 actual spending levels.

The Commodity Futures Trading Commission (CFTC) would see an 82pc spending jump to $308m, but $117m of that would be offset through a fee on financial firms that is unlikely to draw support in Congress.

"President Obama's request presents an admirable equilibrium," CFTC Commissioner Bart Chilton told Reuters. "It proposes both fiscal restraint and needed resources for market oversight and enforcement."

Dodd-Frank was enacted last year in response to the 2007-2009 financial crisis. 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 derivatives market as well as hedge and private equity funds.

Republicans, who control the House of Representatives, have queried funding boosts for regulatory agencies as they look to cut government spending and try to throttle enforcement of Dodd-Frank by starving regulators of additional funds.

Congress did not finish its budget process for fiscal 2011 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 on September 30.

Republicans proposed cuts to spending , with the CFTC hit particularly hard. House appropriators said they wanted to slash $56.8m from the CFTC's current funding of $168.8m for 2011, while the SEC's would be lowered $25m from the current level of $1.1bn.

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 he thought withholding funding from the SEC and CFTC would 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.

The SEC has already put several Dodd-Frank initiatives on hold, including the creation of new offices to oversee credit-raters and facilitate the handling of whistleblower tips and complaints. The CFTC has been forced to curb employee travel and delay hiring staff.

The SEC, through filing fees it charges securities issuers, has been a net contributor to government coffers, but Congress sets its annual budget.

A provision in Dodd-Frank requires the SEC to adjust the fees it charges to offset the amount Congress appropriates, starting in 2012. Anything collected beyond that amount would be classified as "discretionary offsetting collections".

The law also lets the SEC deposit $50 million from its fees into an emergency fund.

Irish Independent

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