February 15, 2011

RE:     Opposition to proposed cuts to SEC/CFTC funding under the proposed CR

Support for amendments to restore funding to these agencies

Dear Member of Congress:

On behalf of Americans for Financial Reform, a coalition of more than 250 national, state and local organizations, and other undersigned organizations, we write in strong opposition to the funding cuts for the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), as proposed in the Continuing Resolution to be considered on the House floor this week. If amendments are offered to restore funding to these agencies we urge you to support them.

These funding cuts starve the two agencies of the basic resources they need to police the safety and integrity of our financial markets, and increase the danger of another financial crisis. They undermine efforts to repair our nation’s financial system and facilitate productive economic activity for the benefit of the general public.

The proposed $56 million cut to the CFTC’s $168.8 million budget is particularly disturbing.  It is shocking that Congress would even consider a proposal that would have the effect of eviscerating the agency with central responsibility for assuring transparency and stability in the derivatives market, on which the health of the overall economy depends. It is difficult not to see these cuts as a back door effort to block new requirements for transparency and accountability, and not budget measures at all.

While less draconian, the proposed $25 million cut to the SEC’s budget is equally irresponsible.   Over the last several decades, millions of middle-income Americans have come to rely on our nation’s securities markets for their retirement security.  The SEC has primary responsibility for overseeing the brokers and investment advisers they rely on for advice, the mutual funds they invest in to fund their retirement, and the disclosures that help them determine the best place to put their money.  By inhibiting its ability to perform these and other essential functions, under-funding the SEC puts the financial security of these working Americans at risk.

Under-funding these agencies is deeply irresponsible given the potential costs of a financial crisis. Indeed, the bulk of the deficits we are struggling to address today reflect the impact of the

2008 financial crisis. Although the economy has begun a slow and painful recovery, unemployment rates remain roughly twice as high as they were prior to the financial crisis. Even today, American households are some $10 trillion poorer than they were in 2007, before the Wall Street collapse.

It is absolutely essential that the House of Representatives reject the inadequate funding levels for the SEC and CFTC proposed in the Continuing Resolution and instead insist that the agencies Americans depend on to protect their financial well-being and the health of the economy be adequately funded.   We encourage you to support amendments that may be  offered on the House floor to restore funding to these two agencies.   With the economy still fragile, this is no time to further undercut investor confidence by defunding the regulatory agencies investors rely on to ensure that their interests are protected.

Sincerely,

Americans for Financial Reform