Journalism in the Public Interest

Funding for Federal and State Financial Regulators Still in Question As Roles Expand


Commodity Futures Trading Commission Chairman Gary Gensler (Photo by Brendan Smialowski/Getty Images)

With more Republican lawmakers taking their posts this week, there’s much speculation about how Washington’s power shifts could starve regulators of funding for the financial reform bill passed last year by a Democratic-controlled Congress. Here’s a quick review of where the funding situation rests with the federal and state regulatory agencies that have increased responsibilities under Dodd-Frank—as well as with the new consumer financial protection agency that was created by the reform bill.

A budget resolution passed in the lame-duck session has left the Securities and Exchange Commission and the Commodity Futures Trading Commission without any extra funding until March. Here’s Bloomberg with some background:

The SEC and CFTC, tasked with writing most of the rules dictated by Dodd-Frank, sought budget increases to at least $1.25 billion and $261 million, respectively, for staffing, technology and infrastructure. The increases would be 10 percent for the SEC and more than 50 percent higher than the CFTC’s current $169 million budget.

Without that funding, new initiatives will be postponed or scrapped, regulators have said.

Gary Gensler, head of the CFTC, has said the demands of the financial reform bill would require 400 new hires to keep up with rulemaking and increased monitoring of the financial markets. He told lawmakers last month that his agency’s current funding is “far less than what is required to properly fulfill our significantly expanded role.”

The SEC’s head, Mary Schapiro, has said that her agency’s new responsibilities would necessitate at least 800 new hires. Reuters has reported that all hiring at the agency is frozen. The SEC has already postponed the implementation of several Dodd-Frank measures, including the creation of an office dedicated to taking tips from industry whistleblowers.

At least one part of the SEC’s oversight responsibilities is being shifted to the states. The Wall Street Journal reported today that as part of the financial reform bill, states are taking over the regulation of more mid-size investment firms. In Texas, for instance, this means that the number of investment firms regulated by the Texas State Securities Board will double, according to the Fort Worth Star-Telegram. The increased regulatory burden comes at a time when many states are already shouldering huge budget deficits, and getting additional resources may not be easy.

Finally, there’s the Consumer Financial Protection Bureau, an agency created by the financial reform bill. Ben Bernanke said in September that the agency, which will open for business in July, has already been given initial funding, the Center for Public Integrity noted. By law, the new agency’s funding comes directly from the Federal Reserve and is not subject to the congressional appropriations process, though that hasn’t stopped outgoing Sen. Chris Dodd from sounding the alarm on defunding fears. Others, including St. Louis Fed president James Bullard, have expressed concerns that the funds—an estimated $500 million each year—may not be enough and are “not based on any careful assessment of what the needs of the bureau will be.”

IMO this is a “damned if you do, damned if you don’t” issue. On one hand we have seen how effective the watchdogs are. Even when perpetrators are exposed nothing of any significance becomes of it. Although I truly believe Ms. Warren could make a HUGE difference…even now there is talk lobbying against her nomination. Might as well just turn it All over to the thieving bastards…come take my home, vehicles, clothes, and the rest of my pension and 401k (yes, you a..holes didn’t quite get it all last time).

From what I can decipher, the SEC and CFTC are in need of approximately 210 million in additional funding for the, albeit watered-down, implementation of the Dodd Frank reform bill.  The government has thus far committed trillions of dollars in programs since the financial crisis began.  Even if we took TARP alone, the 210 million is a fraction of one percent of the 700 billion needed to “save” the financial institutions.  That is a small premium to pay for some added insurance to hopefully avert another catastrophe that would saddle future generations with debt.  It would seem to me this is more about political posturing than fiscal prudence.

Nissim Sasson

Jan. 3, 2011, 3:59 p.m.

Like i said before people are voting against their own interest “Republicans may starve US financial reform of cash”

Deborah Menzies

Jan. 3, 2011, 11:39 p.m.

Mr Obama better grow some—————`s to take on [no matter who they are.]those that are going to try to kill the Dodd Frank Financial Reform Bill[even though it is watered down] .Further he must give Elizabeth Warren the tools and the moneys to create the Consumer`s Protection Agency and appoint her as the permanent Head of it.If he does not take bold action[which is what should have been taken along time ago],Wall Street and everyone and/or institutions that put the world on the verge of financial colapse will take us to that same place again. It is only a matter of time.

Mr Obama it is time to take that bold action.

Say it ain’t so…..Joe!

Excuse the lack of an Humble Opinion!  Do like the country was built with.  Get a Large, Yellow, lined paper pad out, draw a line down the thru the middle and on the left side PRIORITIZE the country’s needs, such as FUND:  Police, Fire, maintain water/air quality, gas supply, fuel supply, gasoline supply, (Medicare, Medi cade) supplies-facilities, and Doctors, “Earned Social Security Benefits”, non-contaminated, affordable food supply, and Strong MILITARY!  On the right side of the paper List:  INCOME necessary to FUND these, first until we get things under control. The municipal water slides, parks, fountains, etc. can wait a while until we can keep these thieves in Government out of office (by PUBLIC HANGINGS upon conviction and and Elect some more thieves to turn this whole idea upside down, as we are Fastly becoming a 2nd rate country and you can’t start over/rebuilding until you set real, harsh examples. Do we want to eat dirt from the street as in other countries that we give Billions to so they won’t have to suffer these indignities?

Good riddance Sen Dodd.  He received the most campaign contributions from Fannie/Freddie according to  #2—Barry Soetoro Obama (hey, what a surprise), and #3, my former senator, John “Herman Munster” Kerry from the great state of Mass.  God help us!

Ahh yes, the GAMEBOARD is being set up once again. They’re gonna get the working people in prison be it physically or financially one way or the other and if at first they don’t succeed they’ll try & try again. Maybe we need our own reform. What if we quit paying the high interest rates that get reduced for the creditors (not much credibility there) but not passed to us. What the hell can they do to millions & millions of people? you rob a bank you go to jail The bank robs you….bailout!

On health care, maybe instead of trying to dismantle the entire thing that this country needs why not fix some of the things that they see wrong. I see a need for torte reform, get the pharmaceuticals and the ambulance chasers off the TV, go after the institutions that are ripping off medicare & medicaid.

The best movie to educate the American people about our financial system. only 30 min.
with a shock at the end about one of our President.

Enjoy. I give it a 10

Nissim Sasson

Jan. 4, 2011, 11:47 p.m.

Garbor its funny, a little long but worth watching : )

Nissim Sasson;  But it is the truth isn’t it?

Nissim Sasson

Jan. 5, 2011, 9:10 p.m.

Garbor yes it is : )

Nissim Sasson

Jan. 5, 2011, 9:11 p.m.

Grabor, yes it is !

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