Financial market regulators would get big boosts to their fiscal 2012 budgets to help them implement the Dodd-Frank financial oversight law under a bill approved by the Senate Appropriations financial services subcommittee on Wednesday.
The bill would match a request by the Obama administration to give the Securities and Exchange Commission a fiscal 2012 budget of $1.407 billion, up about 19 percent from the agency's prior-year budget.
The Commodity Futures Trading Commission would receive $240 million, also roughly a 19 percent boost from its fiscal 2011 budget. The total falls short of the original request by the president for a $308 million fiscal 2012 budget.
Both provisions are part of a larger $21.7 billion financial services spending package that would fund the federal courts and a wide range of agencies including the U.S. Treasury Department and Small Business Administration.
To find money to raise the two regulators' budgets, the bill would make cuts in other areas, including slashing the Internal Revenue Service's budget by $458.8 million.
The full Senate Appropriations Committee is now slated to consider any potential changes and vote on the bill late on Thursday.
"My top priority again this year is to continue to address the resource needs of two of our nation's premier financial regulatory agencies," said the panel's chairman, Democratic Senator Richard Durbin. "As a result of the historic enactment of the comprehensive Dodd-Frank Act last year, these two agencies acquired substantially expanded responsibilities."
The proposed budget increases for the two market regulators would come as the agencies rush to finish implementing more than 100 new regulations required by the Dodd-Frank law. The 2012 fiscal year begins on Oct 1.
But the funding boosts for the agencies sought by Senate Democrats face an uncertain future due to strong opposition from U.S. House Republicans who are unhappy with many provisions in Dodd-Frank and hope to stifle its implementation.
Under Dodd-Frank, the CFTC and SEC gained sweeping new powers to police the nearly $600 trillion over-the-counter derivatives market. The SEC additionally won more authority to regulate hedge funds, credit-rating agencies and municipal advisers.
In June, the House Appropriations Committee refused the Obama administration's request for a bump in the SEC's funding and voted to keep the agency's budget unchanged in fiscal 2012 at $1.185 billion. The bill has not yet been sent to the House floor for a vote.
The House Appropriations Committee also in May rebuffed the Obama administration's request to raise the CFTC's budget, voting instead to lower it to $171.9 million for fiscal 2012. The bill was approved by the full House in June.
In an interview on Wednesday, Durbin acknowledged the future funding for both agencies -- in particular the CFTC -- remains a big unknown.
"There has been pushback against Chairman (Gary) Gensler. Some believe he has been too aggressive. And I think that might be manifested in the number," he said.
Pushback against the CFTC is also likely to surface during the full committee debate on the spending bill on Thursday.
Senator Jerry Moran, the ranking Republican on the Senate Appropriations financial services subcommittee, said on Wednesday he has serious reservations about the proposed funding level.
"I believe the CFTC has failed to prioritize in its rulemaking process," he said. "I believe this bill is an opportunity for us to try to get the CFTC to change their methodology."
Both the SEC and the CFTC have previously told Congress they have the resources to complete the Dodd-Frank rule-writing process, but once it comes time to implement the law, they will need better technology and increased manpower.
The SEC has urged Congress to approve a budget increase, especially because a provision in Dodd-Frank allows the agency to be deficit-neutral by offsetting congressional appropriations through the fees it charges the financial industry.
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