CFTC, SEC Get Boost in U.S. Budget Deal That Cuts Other Federal Agencies
The U.S. Securities and Exchange Commission and Commodity Futures Trading Commission are rare beneficiaries of increased funding as part of a budget deal worked out by Congress for the current fiscal year.
The plan announced today, which imposes $38 billion in cuts on many federal agencies, adds $74 million to SEC spending for the rest of the 2011 fiscal year. That will raise the agency’s annual budget to $1.19 billion as the SEC prepares to meet additional oversight responsibilities mandated in last year’s Dodd-Frank financial-regulatory overhaul.
“It’s certainly good to hear that the SEC was not cut back as some had originally proposed,” said Stephen Crimmins, a former SEC lawyer who is chairman of the Federal Bar Association’s securities law executive council. He said the budget is still well below the $1.3 billion that the Dodd-Frank Act authorized for this year.
Under the budget deal, the CFTC would also see an additional $34 million, bringing its budget to $202.7 million for fiscal 2011. The legislation sets a floor of $37.2 million to be spent on “the highest priority information technology activities” -- almost doubling the current spending level.
“I am grateful to have a budget agreement in place that will provide the Commission with the budgetary certainty we need to fulfill our statutory mandate,” CFTC Commissioner Scott D. O’Malia said in a statement.
The $1.049 trillion budget legislation, which funds the government through Sept. 30, is set for a House vote tomorrow with a Senate vote to follow.
Republicans vs. Democrats
The SEC’s spending became a symbol of efforts to strengthen financial regulation while being attacked as an example of ineffective governance by Republican critics, such as Representative Scott Garrett of New Jersey, who heads the House subcommittee that oversees the agency.
The congressional budget debate ended with an agreement late last week just before a partial shutdown of the government that would have shuttered many agency functions.
The securities regulator’s spending is offset by fees on firms it regulates, however its spending must still be approved by Congress.
“It’s kind of a sad story to see an agency that uses no tax dollars at all and has zero deficit impact being starved like this,” said Crimmins, a partner at the K&L Gates law firm in Washington.
In one concession to Republicans, the budget deal requires the Government Accountability Office to conduct an annual study on “the impact of regulation on the financial marketplace, including the effects on the safety and soundness of regulated entities.”
The SEC and CFTC have been held to the previous fiscal year’s spending levels even though regulators have been working to implement hundreds of new rules under Dodd-Frank.
“We’re stretched incredibly thin,” SEC Chairman Mary Schapiro said in an April 8 speech at the Society of American Business Editors and Writers conference in Dallas. “We can get the rules written, but what we’re not going to be able to do is operationalize them.”
John Nester, a spokesman for the SEC, declined immediate comment on the budget increase.
-- With assistance from Silla Brush and Brian Faler in Washington. Editors: Maura Reynolds, Gregory Mott
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