Wall Street watchdogs face budget cuts in Congress
At a time of dramatically increased responsibilities for two key financial regulatory bodies, there are strong calls to cut back on funding for the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
The fighting goes on after the Senate this week rejected plans that included cutting the CFTC's budget by nearly a third. One consumer advocate told us this kind of cut, if enacted would "destroy the agency." You may have seldom reflected on the CFTC, but it's the regulator being asked to oversee a $300 trillion piece of the derivatives market.
As for the SEC, the House plan had proposed lowering the budget by $25 million. The SEC says key positions are going unfilled and that the money crunch is making it hard to attract talent from, for instance, hedge funds to work on enforcement issues.
Most Republicans did not support the Dodd-Frank financial reform law and are leery of handing over the funding to implement it. At a senate subcommittee hearing Thursday, Senator Mike Crapo, R-Idaho, told the SEC Chairman, Mary Schapiro, that he is concerned about how quickly the SEC is trying to write the rules to put Dodd-Frank into practice. He called for more time for analysis.
Other critics use the more easily-digestible rhetorical point: Why give money to an agency that missed Bernie Madoff's world-class fraud? As we learned in civics class, controlling the purse strings brings with it lots of power.