The Republican-led House was prepared to vote out a measure possibly as early as Thursday that would reduce fiscal year (FY) 2012 funding for the Commodity Futures Trading Commission (CFTC) by about 15%.
The House bill would set CFTC spending at approximately $172 million in FY 2012, which would be $30 million less than the $202 million that was allocated to the agency in the current year. And it would be $136 million below the $308 million requested for the CFTC by the Obama administration in the next fiscal year, which begins on Oct. 1.
Rep. Rosa DeLauro (D-CT) proposed an amendment that would restore the additional $136 million in funding for FY 2012, but because she sits on a House Appropriations subcommittee -- which does not have the authority to authorize that level of a hike in funding -- her amendment withdrew the proposed funding increase, thus making the budgetary impact of her proposal nil.
"Essentially DeLauro is making the argument [in her amendment] that we should be funding the CFTC at the full level" requested by the Obama administration, a DeLauro spokeswoman told NGI.
Language addressing the CFTC funding is part of a $17.25 billion agriculture spending bill (HR 2112) for the Department of Agriculture and related agencies. This bill allocates $2.7 billion less in spending than the current year.
The proposed FY 2012 budget cut for the CFTC comes as the sweeping Dodd-Frank Wall Street Reform Act is poised to go into effect, requiring the CFTC to regulate for the first time the multi-trillion dollar derivatives market in addition to overseeing the futures market. The derivatives market has been estimated to be about nine times larger than the futures market.
"The CFTC is taking on a significant expanded scope and mission. By way of analogy, it is as if the agency previously had the role to oversee markets in the state of Louisiana and was just mandated by Congress to extend oversight to Alabama, Kentucky, Mississippi, Missouri, Oklahoma, South Carolina and Tennessee," CFTC Chairman Gary Gensler testified before the Senate Agriculture Committee Wednesday.
"With seven times the population to police, far greater resources are needed for the public to be protected. Without sufficient funding for the agency, our nation cannot be assured of effective enforcement of new rules in the swaps market...it would hamper our ability to seek out fraud, manipulation and other abuses at a time when commodity prices are rising and volatile," he said.
"All of these things [proposed reforms] that we've been doing...will mean nothing; they'll mean squat; they'll be diddly...if we don't get the resources to do the job," CFTC Commissioner Bart Chilton said earlier this year.
"We're going from roughly $5 trillion in annualized [futures] exchange trading to...hundreds of trillions in oversight. To think that we can do that without another cent is crazy...we will be [particularly] vulnerable in the regulated futures market to fraud, abuse and manipulation."
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