Dodd-Frank 30 Day Countdown: Day 11

Will SEC, CFTC Budget Cuts Impede Dodd-Frank?

It was not shocking to hear that both the SEC and the CFTC would have to extend their rulemaking deadlines, as their newly found responsibilities stemming from Dodd-Frank are certainly burdensome. It would have been nearly impossible for both agencies to cooperatively define key terms relating to the OTC derivatives market on top of creating hundreds of new rules in such a short time. Though the SEC and CFTC have both granted themselves extensions, many involved in the financial markets remain skeptical that either agency can accomplish their goals in time to meet even the extended deadline.

Knowing that they are toting a full load begs the question of how the Legislature expects these agencies to operate on an even smaller budget then prior to Dodd-Frank. The House Financial Services Appropriations Committe approved a bill leveling the SEC’s funding at $1.2 billion, rejecting Obama’s request for an additional $2.2 million to help with Dodd-Frank related costs. The CFTC will fare even worse as it is slated to receive 15% ($30 million) less than it did last year, down to a budget total of $172 million, after House members approved the recent agriculture spending bill.

Gary Gensler, Chairman of the CFTC, said that budget cuts, “would hamper our ability to seek out fraud, manipulation, and other abuses at a time when commodity prices are rising and volatile.” And in fact, House Republicans, most of whom view Dodd-Frank as overregulation that will harm the markets, seem to be on a quest to delay and inhibit the regulatory agencies’ efforts.

Whether you support or are opposed to Dodd-Frank, it seems more than wasteful to enact legislation and then refuse to provide the resources required to implement it.  That the U.S. faces insurmountable debt is no secret, but to take funding away from the agencies who are supposed to be drafting, implementing and enforcing the new regulatory regime feels hypocritical.

http://www.advisorone.com/article/senate-democrats-gop-cuts-sec-could-mean-another-madoff

-Stephanie Kane co-authored this post