House Republicans on the Appropriations Committee today voted to cut funding for the Commodity Futures Trading Commission, the regulator charged with overseeing Wall Street derivatives and commodities trading. The Obama administration has asked for $300 million for the agency for fiscal year 2013, but the GOP only approved $180 million, which is less than the $205 million that the agency received last year.
This funding cut would come just as the CFTC is attempting to implement huge portions of the Dodd-Frank financial reform law, including a new regulatory regime for derivatives, the complex financial instruments that were at the heart of the financial crisis. And Rep. Spencer Bachus (R-AL), chairman of the House Financial Services Committee, acknowledged today that the CFTC, along with the Securities and Exchange Commission, do not have the budgets to keep up with the tasks they’ve been given:
Let me say that there is agreement, I think, among all the panel that your agencies are all functioning under an increased workload, a greatly increased workload, and that you are facing many challenges with not only the economy, but with adopting new rules and increased supervision. And that you are functioning under a budgetary restraint, particularly, I think, the SEC and the CFTC. Your workload has greatly increased and your budget doesn’t reflect this.
Bachus, who has said that Washington’s role should be to “serve the banks,” has led the charge to cut funding for Wall Street regulators, backed up by Senate Minority Leader Mitch McConnell (R-KY), who believes America is better off the less money regulators have.
CFTC Chairman Gary Gensler has said that the result of the House’s effort will be “to effectively put the interests of Wall Street ahead of those of the American public.” Rep. Barny Frank (D-MA) has added, “At a time when JPMorgan Chase has reported the loss of $3 billion or more in the derivatives markets, the Republicans are refusing to appropriate a small percentage of that amount to provide the protections we need against a return to financial chaos.”