Budget battle looms for Wall St. law

Lawmakers decided against boosting short-terms funds for financial
agencies this week, a move that may foreshadow a lengthy partisan
battle over financing the Wall Street overhaul law.

Congress approved an emergency spending bill on Wednesday to keep the government running until Dec. 3, but lawmakers denied requests for more money from the Commodity Futures Trading Commission (CFTC), the Securities and Exchange Commission (SEC) and the Treasury Department.

{mosads}The three offices had requested additional funding to hire more employees, buy computers and add office space as they put into place some of the most sweeping new financial regulations in decades. President Obama signed the “Dodd-Frank” financial overhaul law in July, and regulators have started drafting new rules governing the $615 trillion derivatives market, the securitization industry and the process for dissolving failing firms.

The request for additional short-term money ran into tough criticism from Republicans, who sought a “clean” spending bill without the increases.

House Republicans opposed the Obama administration’s request for money for the Treasury Department because it creates a new Consumer Financial Protection Bureau (CFPB) with oversight of consumer products, including home loans and credit cards.

With Republicans set to gain additional seats, or possibly control of Congress, in the midterm elections, the battle over appropriations will likely continue in a lame-duck session of Congress.

By early December, Congress will either need to pass another stopgap spending measure or wrap annual spending bills into a single “omnibus” package. Neither the House nor the Senate has approved the spending bills for the financial agencies.

“The implementation of that good and historic law is in jeopardy if the CFTC doesn’t have increased resources,” Bart Chilton, a CFTC commissioner, said this week.

Chilton criticized the flat funding as “insufficient.”

{mosads}A spokesman for the SEC declined to comment on the funding levels.

Democratic lawmakers who drafted the legislation said they expect Republicans will try to limit the funding.

“They declared war on this bill, and they can’t repeal it,” House Financial Services Committee Chairman Barney Frank (D-Mass.) said on Wednesday. “But that’s a very real danger — they will try to cut off the enforcement money.”

House Agriculture Committee Chairman Collin Peterson (D-Minn.) said Republicans would “do it at their peril.”

Earlier this year, the appropriations subcommittees with oversight of the CFTC and SEC vowed to increase the budgets for the agencies.

Lawmakers planned to increase the SEC budget by roughly $200 million, or nearly 20 percent. SEC Chairwoman Mary Schapiro said the agency wants to hire 800 employees to write and enforce scores of rules required under Dodd-Frank.

The Obama administration requested, and the subcommittees approved, a large increase in CFTC funds to oversee the derivatives market. Under the Senate’s annual spending bill for the CFTC, the commission would receive an additional $120 million, or a 70 percent boost.

“Though we have the resources to write the rules required by Dodd-Frank, we will need more staff to implement and enforce them in the years to come,” CFTC Chairman Gary Gensler said on Thursday.