White House: Budget Request Will Include Doubling SEC, CFTC Funding by 2021
February 08 2016 - 7:00PM
Dow Jones News
WASHINGTON—The Obama administration will call on lawmakers to
double the budgets of the top U.S. market cops over the next
several years, the White House announced Monday, a push almost
certain to encounter opposition from the Republican-controlled
Congress.
The big request, which the White House is set to unveil formally
Tuesday, calls for boosting annual funding for the Securities and
Exchange Commission and the Commodity Futures Trading Commission to
$3 billion and $500 million, respectively, by the fiscal year
starting Oct. 1, 2020, according to a blog post by Jeffrey Zients,
director of the National Economic Council.
"The President will continue working to make sure that the
financial system works for everyone," Mr. Zients wrote. "As the
financial services industry continues to rapidly evolve, some in
Congress have used budget limitations to hamper the agencies
charged with establishing and enforcing the rules of the road."
President Barack Obama's push to boost funding significantly for
the SEC and CFTC comes amid increasing calls from Democratic
presidential candidates Bernie Sanders and Hillary Clinton to do a
better job at holding Wall Street firms and their employees
responsible for misconduct.
Tuesday's blueprint, for the fiscal year beginning Oct. 1, is
widely seen as an opening bid for budget negotiations with
congressional Republicans and is unlikely to be enacted without
significant tweaks.
Mr. Zients said the White House would request $1.8 billion for
the SEC next year, $200 million above its current funding level,
and $330 million for the CFTC, up from the $250 million level it
has hovered at for the second consecutive year.
Both the SEC and its smaller cousin the CFTC have said they lack
sufficient resources to police markets and fully implement dozens
of mandates under the 2010 Dodd-Frank financial overhaul law. The
CFTC's funding woes prompted it to furlough employees a few years
ago and delay or shelve some enforcement matters.
SEC officials note their agency's budget has no impact on the
federal deficit because the agency funds its operations with
transaction fees levied on Wall Street firms to offset its
appropriations from Congress.
As in prior years, the White House will call for new fees on the
swaps and futures markets overseen by the CFTC to pay for that
agency's funding increase. Mr. Zients said the user fees would
"shift the costs of regulatory services" from taxpayers to the
firms that benefit from the CFTC's oversight.
"This is a common-sense change that is long overdue," Mr. Zients
said.
Republicans in Congress have resisted calls to boost CFTC
funding, citing the constraints of the broader federal budget.
Appropriators last agreed to an increase for the agency in 2014, as
part of a year-end funding deal that included a rollback of a
controversial provision of the Dodd-Frank law requiring banks to
"push out" some of their riskiest derivative-trading activities
into affiliates that aren't eligible for federal backstop
programs.
The SEC long has complained that its limited manpower means it
can inspect the roughly 12,000 investment advisory firms under its
jurisdiction only about once a decade on average. The Wall Street
Journal reported last month that it plans to increase the number of
compliance examiners for investment advisers by 20% over the coming
weeks—to about 630—by shifting the focus of some of its existing
examiners away from brokerages. The move means the agency will rely
more heavily on the Financial Industry Regulatory Authority to
conduct exams of brokerages.
Efforts to sharply boost the SEC's funding will likely hit
snags. In the past, Republican lawmakers have successfully
rescinded some of the agency's technology funding, saying it goes
into a "slush fund" account without sufficient oversight. They have
privately questioned if the agency is capable of spending all its
appropriations in one year, noting the regulator was able to remain
fully open during the October 2013 government shutdown using
unspent money from the prior fiscal year.
Write to Andrew Ackerman at andrew.ackerman@wsj.com
(END) Dow Jones Newswires
February 08, 2016 18:45 ET (23:45 GMT)
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