AFR Press Statement: President Obama’s FY 2013 Budget

February 13, 2012

CONTACT: John Carey at 202-466-1854

AFR Statement on President Obama’s FY 2013 Budget

Washington, DC
– Americans for Financial Reform, a coalition of more than 250 national and state organizations working together for strong Wall Street reform, issued the following statement today:

President Obama’s FY 2013 budget request would increase the CFTC budget to $308 million, the same amount requested last year, from its current $205 million budget. The President’s budget also increases funding for the SEC to $1.566 billion, up from 2012’s budget of $1.321 billion.

AFR strongly supports the increased funding levels, and believes that adequate funding for these regulators is vital to holding Wall Street accountable, and preventing another financial crisis. Huge volumes of hidden and un-backed derivatives trades were a key cause of the financial crisis. To prevent a repeat of that disaster, and to make markets safer and more transparent the Dodd-Frank Act greatly expanded the CFTC’s responsibilities, giving it oversight of approximately $280 trillion in previously unregulated domestic swaps markets, a more than seven-fold increase in the notional size of the market the CFTC must supervise.  It also directed the CFTC to regulate excessive speculation in the commodities markets that is driving up the costs of gas and food.

The SEC also has a crucial role to play in implementing financial reform.  Among other things, it has been given expanded responsible for overseeing securities-based swaps, credit rating agencies and asset-backed securities, all of which played central roles in causing the financial crisis.  A Boston Consulting Group study released last year found that the SEC is currently approximately 400 employees short of the staffing level needed to fulfill its current regulatory responsibilities.

The President has recommended that much of the CFTC budget increase be funded in a deficit-neutral manner by imposing a very small fee on users of CFTC-regulated derivatives markets. We support this proposal to offset CFTC funding through user fees. But however the CFTC is funded, resources adequate for it to do its job are tiny compared to the cost of leaving the derivatives markets in the dark.

As CFTC Chairman Gensler wrote in a letter to Members of Congress “[A] well-funded CFTC is a good investment for the American public. Three years ago, the financial system failed, and the financial regulatory system failed as well. It is evident that swaps played a central role in these twin failures. When financial institutions fail, real people’s lives are affected. More than eight million jobs were lost. Millions of Americans lost their homes. Today, families continue struggling to make ends meet.”

With millions of Americans still out of work, more than $8 trillion lost in home values and retirement savings, and millions of foreclosures it could not be clearer that Wall Street must not be allowed to gamble in the shadows.  Defunding the CFTC is not about saving money, it’s about protecting the status quo for Wall Street special interests. It would sabotage progress made in reining in the casino economy, and allow a handful of firms to continue to speculate in the dark at the public’s expense.