A Senate appropriations subcommittee Tuesday voted out a spending bill that would significantly raise spending for the Commodity Futures Trading Commission and the Securities and Exchange Commission (SEC) to oversee the multi-trillion-dollar derivatives market. The full Senate Appropriations Committee is expected to vote on the measure later this week.
The Senate Appropriations Subcommittee on Financial Services and General Government proposes raising the CFTC's spending by 50% in fiscal year (FY) 2013 to $308 million to accommodate the agency's "significantly expanded responsibilities" under the Dodd-Frank Wall Street Reform Act. The CFTC's appropriation is part of a much broader spending measure that also would increase spending for the SEC by $245 million to $1.56 billion.
The vote by Senate Democrats to hike funding for the two agencies comes only a week after a Republican-led House appropriations subcommittee approved a reduction in spending for the CFTC (see Daily GPI, June 11).
"Short-changing this agency [CFTC] would put markets at risk," as the House has done in its appropriations bill, said Senate Appropriations Subcommittee Chairman Richard Durbin (D-IL). "If we don't have enough cops on the beat...it invites disaster. The CFTC must have the resources [to do its job]."
Last Wednesday the House Appropriations' Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies approved only $180 million for the CFTC in FY 2013, a cut of $25 million from FY 2012 and $128 million below the amount that President Obama requested for the agency. The proposed funding for the CFTC is included in a bill that calls for $19.4 billion in discretionary funding for a number of Department of Agriculture, rural economic development and rancher conservation programs.
Wall Street has been lobbying heavily against reforms to regulate the derivatives market, and lower funding could potentially weaken the CFTC's ability to rein in violators.
"The result of the House bill is to effectively put the interests of Wall Street ahead of those of the American public by significantly underfunding the agency Congress tasked to oversee derivatives -- the same complex financial instruments that [in 2008] helped contribute to the most significant economic downturn since the Great Depression," said CFTC Chairman Gary Gensler last week.
"The CFTC's...staff is just 10% more in numbers than at our peak in the 1990s, yet Congress has now directed the agency to oversee the swaps markets; that is eight times larger than the futures market." Without additional funding, he said, there could be "mayhem and loss of confidence" in the energy and agriculture markets that the CFTC oversees.
Before the spending bill can be sent to the House floor, it must first be approved by the full appropriations committee. A mark-up by the committee has not been scheduled yet, a spokeswoman said Tuesday.
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