[Congressional Record Volume 157, Number 30 (Wednesday, March 2, 2011)]
[Extensions of Remarks]
[Page E396]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




     FINANCIAL TIMES CRITICIZES REPUBLICAN ASSAULT ON SEC AND CFTC

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                           HON. BARNEY FRANK

                            of massachusetts

                    in the house of representatives

                        Wednesday, March 2, 2011

  Mr. FRANK of Massachusetts. Mr. Speaker, in a very thoughtful 
editorial on February 24th, the Financial Times, a widely-respected 
voice of a responsible free market approach to the economy, expressed 
strong criticism of the reductions in the budget requests that were 
made for the Securities Exchange Commission and the Commodities Futures 
Trading Commission. These two agencies were given significantly 
enhanced responsibilities in the recently passed financial reform bill, 
and the Republican budget means that, most glaringly but not 
exclusively, derivatives will continue to lurk in the shadows of the 
financial system with their great potential for harm when improperly 
governed.
  The Financial Times, not given to radical thought, closed this 
editorial by noting that ``If the Republicans want another financial 
crisis, they are going about it the right way.''
  Mr. Speaker, few public policy issues are as important to us as 
avoiding the disaster of another financial crisis and its consequent 
plunging of the economy as a whole into deep recession and so I ask 
that his important editorial from the Financial Times be printed here.

               [From the Financial Times, Feb. 24, 2011]

                     Editorial: Funding Regulators

       The Dodd-Frank financial regulation law passed in July 2010 
     was a far-reaching effort to promote financial stability. 
     Whether the legislation can achieve that goal, though, 
     depends on how it is implemented. On this, there are some 
     worrying signs. The House of Representatives has voted to cut 
     funding by a third to the Commodity Futures Trading 
     Commission. It also stripped $25m from the Securities and 
     Exchange Commission. Squeezing two of the most important 
     regulators jeopardises the progress made in creating a safer 
     financial system.
       Too much regulation did not cause the financial crisis. In 
     the last decade, the SEC and CFTC have anyway been stretched. 
     Over that time, the industry's complexity and size have 
     grown. Technology has also changed the way markets operate, 
     and regulators are as yet inadequately equipped with tools to 
     monitor that change.
       Even if the remit of these two bodies had not expanded, 
     therefor; to cut their budgets would be ill-advised. To do so 
     when Dodd-Frank has added to their tasks, is irresponsible. 
     The White House understands this: the proposed 2012 budget 
     would nearly double the CFTC's funds and increase the SEC 
     financing by a fifth.
       It is imperative that the SEC and CFTC are properly 
     resourced. They are already behind schedule in writing the 
     regulatory detail. This strain is particularly acute for the 
     CFTC, which is taking on a proportionately greater burden 
     under Dodd-Frank: previously unregulated derivatives fall 
     largely under the CFTC's purview.
       The current funding model is not the only option. User fees 
     could be a viable alternative to congressional financing. 
     Some other financial regulators already self-fund; the SEC 
     partly does so. The futures industry has lobbied against this 
     model for the CFTC. What matters most, however, is that 
     regulators receive enough funding without strings attached.
       The pressure to cut the SEC and CFTC budgets is part of the 
     Republican war on the White House. Dodd-Frank is not perfect, 
     but it improves on what came before. It cannot work, however, 
     if politicians do not support regulators' efforts. If the 
     Republicans want another financial crisis, they are going 
     about it the right way.

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