SEC and CFTC not off to a good start in the New Year

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The collapse of a $1.1 trillion Senate budget measure before end of 2010 could leave two of the U.S.’s top financial regulators without enough funding to carry out reforms.

The Dodd-Frank financial regulation bill left the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in charge to reform financial services ranging from complicated and often opaque derivatives markets to reducing speculative investments by banks.   The SEC alone must write more than 100 new rules, while the CFTC must reform regulation of the commodities market and related exchange-traded products.

The Dodd-Frank bill had envisioned doubling the SEC’s budget by 2015.    More specifically, the SEC was supposed to receive $1.3 billion and the CFTC’s budget was to expand by $117 million under the Senate measure.

However, at the end of December 2010 Congress passed a stop-gap funding measure to keep the federal government up and running through March 4, 2011, but without the big increases Democrats had sought for the both agencies.

Operations within tight budget force both agencies to delay or cut back enforcement and market oversight efforts.    As the result, the longer the SEC and CFTC operate under significant budgetary restrictions, the greater the impact on financial services.

While the budget cut back is temporary, it is unclear that a permanent budget bill will favor either agency.   Republicans—who voted nearly unanimously against the Dodd-Frank law—are to take control of the House of Representatives in January 2011 and it is unclear that they will be willing to increase the regulators’ budgets.

Anna Timone (195 Posts)


  1. Appreciate the behind the scenes insight Anna – I never fully read the Dodd-Frank power grab, and am not the CFTC’s biggest fan… so I hope this does go down in flames… Gov’t “owns” too much of our assets as it is… Telling us where we can invest, and how much, is beyond ridiculous – Here’s hoping that with the national budget in such disarray, this rubbish regulation will not be enforced – or better yet, get chucked out… Well, back to Cyprus and my funds… traded freely…

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