The Senate Appropriations Commission Thursday voted out along partisan lines a spending bill that provides the Commodity Futures Trading Commission (CFTC) with an 18% hike in funding for fiscal 2012 to implement reforms under the Dodd-Frank Wall Street Reform Act.
The financial services appropriations measure, which cleared the panel by a vote of 16-14, includes $240 million in funding for the CFTC for next year, an increase of $37.7 million over the current spending level for the agency to carry out its expanded responsibilities to protect the derivatives market, as well as the futures market, from fraud, manipulation and abusive practices.
The bill, which was reported by the Subcommittee on Financial Services and General Government last Wednesday, provides a total of $21.7 billion in discretionary funding for a number of agencies, such as the Securities and Exchange Commission (SEC), Internal Revenue Service, Treasury and the CFTC, for the the next fiscal year, which begins Oct. 1. This is $224 million below what was approved for the current fiscal year and $4.25 billion less than what President Obama requested for the financial services agencies.
Subcommittee Chairman Richard Durbin (D-IL), who was surprised at the partisan nature of the debate over his panel’s bill, said the funding increases for the CFTC and SEC were justified. “They maintain the integrity of major markets in the United States,” he noted.
However, Sen. Jerry Moran (R-KS), the ranking member on the subcommittee, argued against a budget hike for the CFTC. “I believe the CFTC…has failed to prioritize rulemakings under Dodd-Frank, proposing unnecessary discretionary rulemakings that [are] not required by the act and will increase staffing and funding demands. For instance, the regulations enacting CFTC-imposed position limits are not mandatory, and cannot proceed until the CFTC makes a finding based upon data that position limits are appropriate.
“[But] full market data will not be available until data reporting and swap data repositories are up and running. These position limit rules should be delayed at least until the swap reporting repository rules have been operating for [a] sufficient amount of time to garner the necessary data,” he said. Moran called position limits controversial and noted that they currently were the target of an inspector general’s investigation.
In June the House approved far less funding for the CFTC in 2012. The House measure sets CFTC spending at approximately $172 million in 2012, which is about $68 million less than what the Senate has approved so far and is $30 million less than the $202 million budget for the CFTC in the current year (see NGI, June 20).
The House and Senate will have to reconcile their budget differences for the CFTC. This comes at a time when the CFTC is starting to implement Dodd-Frank reforms 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.
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