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Consumer and investor advocates launched a web-based campaign on Wednesday designed to halt the proposed budget cuts to the Securities and Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) that are being recommended by House Republicans.
The nonprofit group ShareOwners.org along with the Consumer Federation of America (CFA) and the Council of Institutional Investors (CII) joined forces to launch the campaign that urges investors to send a message to their Congressman through ShareOwner.org's web site opposing the funding cuts for the SEC and CFTC that are currently being debated in the House.
The House is considering this week its continuing resolution that extends federal funding for the remainder of 2011 but includes $100 billion in proposed cuts. Under the FY 2011 CR, the SEC would see a budget cut of $41 million below the current CR that the regulator is operating under that was passed in December 2010 and expires on March 4. The House hopes to vote on the CR by Thursday and then send the legislation to the Senate.
The $41 million cut for the SEC is based on the fact that the continuing resolution for the current fiscal year (2010) gave the SEC the authority to spend $1.1 billion. The House Republican resolution for the rest of 2011 would cut $41 million from the earlier appropriation to $1.069 billion.
House Republicans have also proposed taking the SEC and CFTC’s budgets back to Fiscal Year 2008 levels.
The CFTC under the FY 2011 CR would see a $56.8 million cut from its current $168.8 million budget.
“With the release of their 2011 continuing resolution, House Republicans have removed any remaining ambiguity about their intent to defund regulators whose role is to rein in Wall Street excess,” said Barbara Roper, director of investor protection at the CFA, during a conference call announcing the campaign. “The cuts proposed for the SEC and CFTC are
immaterial in the context of the overall federal budget, but they would be harmful to the SEC and nothing short of crippling for the CFTC.”
Roper added that published reports have quoted President Obama as saying that if the Senate proposal on the 2011 budget looked anything like the House CR, he would be forced to veto it.
Tracy Stewart, executive director at ShareOwners.org, said on the call that the budget cuts for the SEC and CFTC “are an invitation to disaster in terms of financial market integrity and efforts to restore investor confidence.” Given the need for the "SEC and CFTC to oversee the most sweeping financial reforms since the Great Depression," she continued, “it is absolutely essential to all Americans that the Senate and the Administration insist that the agencies that protect our financial well-being and the health of the economy be adequately funded to perform their crucial work.”
Both Roper and Stewart agreed that the SEC’s budget shortfall would result in either “delaying or even halting fiduciary rulemaking.” Without the adequate funds for staff to help implement a common fiduciary standard for advisors and brokers and “follow up on complaints, the SEC won’t be able to enforce it,” said Stewart.
Jeff Mahoney, general counsel for CII, said during the call that rather than budget cuts, “the solution should include providing the SEC and CFTC with the resources necessary to improve their effectiveness and better fulfill their important missions--missions which have now been significantly and appropriately expanded by Dodd-Frank.” Underfunding the SEC and CFTC, he continued, “will likely guarantee weak enforcement of our securities laws and lax oversight of our financial markets, a result that should concern investors and all Americans.”