If You Can't Beat 'Em - Cut Their Funding

In yet another attempt to hinder the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the House Appropriations Committee passed two measures this week to dramatically cut the budgets of key regulatory agencies.

The 2012 Financial Services Appropriations Bill includes $12.2 billion for the Treasury Department, which is $929 million below last year’s level and nearly $2 billion below the President’s request. The bill also limits mandatory funds for the Consumer Financial Protection Bureau (CFPB) to $200 million and subjects it to annual appropriations, giving the House more oversight capability. In addition, the bill limits funding to the Office of Financial Stability to $200 million. The bill provides $1.2 billion for the Securities and Exchange Commission, which is equal to last year’s levels and $222 million below the President’s request.

The 2012 Agriculture Appropriations Bill includes $172 million for the CFTC, a 15 percent cut from last year and nearly half of the $308 million the President requested. Subcommittee Chairman Jack Kingston (R-GA) said the bill takes spending to pre-stimulus, pre-bailout levels while ensuring that the CFTC and other agencies “are provided the necessary resources to fulfill their duties.” CFTC Chairman Gary Gensler has been saying for over a month that the CFTC cannot possibly fulfill its new role under Dodd-Frank without additional resources, but Republicans counter that the CFTC has been granted too broad authority and has been overstepping its role.

Some members are taking it even further, with Rep. Scott Garrett (R-NJ) introducing an amendment yesterday which prohibits the CFTC to use appropriated funds to promulgate any final rules until 12 months after the final swaps rules are completed. The swaps rules are slated to be finalized in December 2011, which means the CFTC would be at a standstill until at least December 2012.

CFTC Gary Gensler told the Agriculture Committee yesterday that these budget cuts will stymie the agencies’ ability to enforce Dodd-Frank, which appears to be what the Republicans are banking on.

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