Thursday, December 08, 2011

House Legislation Would Fully Fund CFTC Through User Fees

Rep. Peter Welch (D-VT) has introduced legislation to fully fund the Commodities Future Trading Commission so that it can regulate the risky financial transactions that contributed to the 2008 financial crisis, the recent collapse of MF Global, and the speculation-driven rise in energy prices. The Wall Street Accountability through Sustainable Funding Act, co-sponsored by Rep. Leonard Boswell (D-Iowa) and Rep. Rose DeLauro (D-CT), would create a stable, sustainable funding mechanism for the CFTC. Currently the Commission relies on an annual appropriation from Congress to fulfill its mandate. The CFTC’s FY2012 budget was cut by 33% and further cuts would occur under the scheduled budget sequestration.

The Welch/DeLauro/Boswell bill would create a new funding mechanism for the CFTC modeled after the SEC's funding source. Under the Act, the CFTC would cover its annual budget by collecting transaction fees from covered market participants.

If you want stable markets, said Rep. Welch, you need a stable regulator. The legislation would fully fund the market policing powers of the CFTC without taxpayer dollars. For too long, emphasized Rep. Welch, Congress has used the CFTC budget as a ``political whipping boy’’ at the expense of stable markets. The legislation would ensure that the CFTC has predictable and reliable resources to do its job.

Following the 2008 financial crisis, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act, giving the CFTC new authority to regulate risky financial transactions. The CFTC has identified 32 areas where new rules will be necessary to implement the law. Without adequate funding, noted the sponsors of the bill, the CFTC will not be able to effectively implement and enforce the Dodd-Frank reforms.

In addition to the SEC, other federal regulatory agencies funded through user fees include FERC, the FCC, the National Credit Union Association, the Federal Housing Finance Agency and the FDIC.

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