If you loved the Great Recession and Bernie Madoff, you’ll probably endorse proposed funding cuts to the SEC and CFTC. If you’d like to avoid another financial disaster and think investors should be protected, go to ShareOwners.org to send a message to your Congressional representatives to oppose the cuts. I did; its quick and easy. I hope you will too.
Last Friday, House Republicans released their proposed 2011 Continuing Resolution (CR) to fund the government for the balance of the 2011 fiscal year, once current funding runs out on March 4th. Included are proposed cuts of $25 million from the $1.12 billion budget of the SEC and $56.8 million from the $168.8 million budget of the CFTC. Additionally, efforts are afoot in the U.S. House to impose even more dramatic slashes to fiscal year (FY) 2012 spending, rolling back funds to 2008 levels. For the SEC, that would mean a steep cut of about $200 million. The SEC Inspector General testified last week that such a drastic reduction would force the SEC to lay off 600 employees. For the CFTC, FY 2012 funding would drop by nearly a third to roughly $110 million…
Specific examples of SEC and CFTC tasks that would be directly endangered by meat-ax budget cuts in the 2011 CR and for FY 2012 include the following:
- The CFTC has been given the job of creating a regulatory regime for and providing oversight of the vast, multi-trillion-dollar over-the-counter derivatives market — a market many times larger and more complex than those it already oversees.
- The SEC shares responsibility for swaps market oversight and has also taken on an expanded role in policing credit rating agencies as well as hedge funds and private equity funds.
- The SEC’s budget shortfall would have the effect of either delaying or even halting fiduciary rulemaking. The agency was asked by Congress to look at the effectiveness of existing rules governing brokers and investment advisers as part of the Dodd-Frank. Without money for staff to help implement a common standard and follow up on complaints, the SEC won’t be able to enforce it.
EarthTimes seems to have the best coverage of this story. See their full coverage, complete with quotes, at ShareOwners.org, CFA and CII Launch Web Push To Save Crucial SEC, CFTC Financial Market Oversight From Budget Cuts. Listen to audio from the ShareOwners.org/CFA/CII news event that was held yesterday.