Financial regulators asked lawmakers on Wednesday for more money to enforce dozens of new rules and oversee Wall Street.
Although the Commodity Futures Trading Commission and the Securities and Exchange Commission received some additional money in April, the agencies say they are still hurting for cash. Now, the regulators are adopting a refrain more familiar to disappointed sports fans than powerful regulators: Wait till next year.
Gary Gensler, the Commodity Futures Trading Commission?s chairman, and Mary Schapiro, the SEC?s chairwoman, told a Senate appropriations subcommittee that they needed hundreds of millions of dollars in 2012 to prevent another financial crisis.
?In 2008, both the financial system and the financial regulatory system failed the test for the American public,? Gensler said in testimony before the subcommittee that doles out money to financial regulators. In the wake of the crisis, Congress passed the Dodd-Frank Act, which requires Gensler and Schapiro to oversee the $600 trillion swaps market, an industry at the centre of the financial crisis.
?An investment in the CFTC is warranted, because, as we saw in 2008, without oversight of the swaps market, billions of taxpayer dollars may be at risk,? Gensler told the subcommittee. The panel is weighing whether to increase regulatory budgets during the government?s fiscal year 2012, which starts on October 1.
Schapiro said any cuts would have a ?profound impact? on her agency. Still, the agencies are hardly poor.
Both agencies received more money in April, on top of earlier budget increases approved in the aftermath of the crisis. The SEC?s budget increased 6% this year, to $1.18 billion, which is nearly triple what it was a decade ago. The Commodity Futures Trading Commission?s budget recently grew 20%, to $202 million.
But the new money falls short of what President Obama had requested for the agencies and what the Dodd-Frank Act had called for them to receive.
As DealBook reported on Tuesday, the agencies are still struggling to fill crucial jobs, enforce new rules and upgrade market surveillance technology. Regulators warn that their money problems have also jeopardised their most important duty: keeping an eye on Wall Street.
The Commodity Futures Trading Commission says the uncertainty has forced it to delay some investigations and forgo other potential cases altogether. The SEC?s enforcement division has adopted cutbacks, too, including curbing its use of expert witnesses in some securities fraud trials.
The agencies also face substantial new responsibilities under Dodd-Frank, which requires the SEC to write more than 100 new rules, open five new offices and publish more than 20 studies.
To do so, the SEC has requested a $1.4 billion budget for 2012, a roughly $220 million increase over its current funding. The Commodity Futures Trading Commission wants to add $106 million to its budget, which would bring it to $308 million.
But Republicans are looking to slash the agencies? budgets, as the nation?s budget deficit swells. The Republican-controlled House of Representatives recently approved a 2012 budget plan that would roll back spending to 2008 levels, which would make huge dents in the regulators? budgets.
?We?re all aware of our budget deficit,? said the subcommittee?s ranking Republican, Jerry Moran of Kansas. ?Simply
increasing funding does not ensure that an agency can successfully achieve its mission.?
Moran also questioned whether Gensler?s budget should focus more on increasing the agency?s market surveillance technology, rather than hiring new lawyers.