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House Panel Votes to Give SEC $1.5B in 2017; Hensarling Looks to End Dodd-Frank

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The House Appropriations Committee voted Thursday to give the Securities and Exchange Commission $1.5 billion, more than $200 million less than the $1.7 billion requested in President Barack Obama’s fiscal year 2017 budget.

Obama’s fiscal 2017 budget request is an increase of $176 million, or 11%, from the agency’s 2016 budget.

Rep. Ander Crenshaw, R-Fla., stated during the Thursday markup of the bill by the full committee that “no agency has received so many increases over the years as the SEC.”

Said Crenshaw: “We give them [the SEC] additional money in our bill for IT [information technology] and to do some economic analysis so they understand the impact their rules are having on the community and can withstand judicial review.”

SEC Chairwoman Mary Jo White “is moving the SEC in the right direction — prioritizing enforcement and protecting investors, and not doing politically charged rules and regulations,” Crenshaw said. “We’ve kept the SEC at a reasonable [funding] level.”

An amendment to bring SEC funding back up to Obama’s FY2017 budget level was defeated during the markup.

The Senate Appropriations Committee has yet to set a date to consider its financial services funding bill.

White told the Senate Appropriations Financial Services Subcommittee on April 12 that the agency would use $14.7 million of Obama’s $1.781 billion fiscal 2017 budget request to enhance the agency’s cybersecurity controls, specifically to secure the agency’s data and “what companies provide to us.”

Securing the boost in funds under Obama’s budget would allow the agency to continue to add examiners to focus on cybersecurity issues as well as investment advisors, she told lawmakers.

The SEC has said it would use the 11% increase to hire 250 additional staffers, including 127 new examination staffers, of which 102 would be added to examine investment advisors and investment companies.

The 102 additional examiners would be in addition to the 100 examiners that the agency is looking to shift from broker-dealer exams to advisor exams.

House wrangling over federal agencies’ budgets came the same week as House Financial Services Committee Chairman Jeb Hensarling, R-Texas, announced plans to replace Dodd-Frank with his Financial CHOICE Act.

Among Hensarling’s changes includes retroactively repealing the Financial Stability Oversight Council’s (FSOC) authority to designate firms as systemically important financial institutions and changing the Consumer Financial Protection Agency’s name to the “Consumer Financial Opportunity Commission (CFOC).”

Hensarling said the new CFOC should have a dual mission of consumer protection and competitive markets, with a cost-benefit analysis of rules performed by an Office of Economic Analysis.

He would also replace the current CFPB’s single director with a bipartisan, five-member commission subject to congressional oversight and appropriations.

Riders were also attached to the House Appropriations bill to strip the CFPB of its independence and transform it into a five-member commission as well as “stall the CFPB’s rule to end the use of forced-arbitration clauses that keep consumers from banding together to hold banks and lending companies accountable in court,” according to Americans for Financial Reform.

Hensarling’s act would also repeal sections and titles of Dodd-Frank that limit capital formation, including the Volcker Rule, and also repeal the SEC’s authority to “both prospectively and, possibly, retroactively eliminate or restrict securities arbitration.”