President Obama Calls for Doubling CFTC and SEC Funding over Five Years
Commentary by Steven Lofchie
The administration requested that CFTC and SEC funding be doubled from their 2015 levels. In a statement contained in its FY 2017 budget submission to Congress, the administration recommended that the down payment toward the five-year doubling target include $1.8 billion for the SEC and $330 million for the CFTC.
The administration asserted that "the agencies charged with establishing and enforcing the rules of the road are hampered by budget limitations including 'constraints' that delayed and forced the CFTC to cut back on its examination of clearinghouses, critical points of systemic risk in our financial system." Further, without the funds for adequate staffing, the SEC "is not able to examine investment advisors as frequently as it should, introducing significant risk to investors and the economy."
In sum, the administration maintained that the budget request is intended to (i) reduce risk in the financial sector by taking actions such as "leveling a fee on the largest financial firms on the basis of their liabilities," (ii) "oppose efforts to restrict the funding independence of other financial regulators such as the Consumer Financial Protection Bureau" and (iii) "fight other attempts to roll back Wall Street Reform."
Commentary
Given their expanded responsibilities, there is no doubt that the federal financial regulatory agencies are poorly funded. The dispute over funding levels reflects ongoing tension between public policy and politics. How many of the current regulatory obligations are divorced from policy entirely? How much of the dispute is about good regulation and how much is devoted to the business of collecting fines?
It is difficult to understate the peculiarity of the notion contained in the funding request that the CFPB should maintain "funding independence." This desired "independence" is nothing more than independence from the Congress itself, the institution charged with control over the governmental budget. If the CFPB is to have "funding independence" from Congress, then who is supposed to control the CFPB's funding or decide whether its funding will be controlled at all? However highly one might think of the CFPB's work, by what logic should that one particular agency control its own funding and not be subject to congressional control? For that matter, why should Congress control the funding of any agency? Perhaps they all should have "independent funding," since they all work tirelessly toward the public good.
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