Washington - US Senator Robert Menendez (D-New Jersey), a member of the Senate Banking Committee, joined with Banking Committee Chairman Tim Johnson (D-SD) and Chairman of the Subcommittee on Securities, Insurance, and Investment Senator Jack Reed (D-RI) to call on Congress to provide Wall Street regulators with the resources they need to hold Wall Street accountable and protect middle class investments. The Senators released a letter today to the Senate Appropriations Chairs and Subcommittee Chairs calling on them to support full funding for the United States Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) both in the 2011 Continuing Resolution and in the FY 2012 budget.
Specifically, the proposed Republican budget cuts both the SEC and CFTC budgets by 2 percent and 34 percent, respectively. President Obama is proposing an increase to $1.43 billion for the SEC and $308 million for the CFTC. Cuts to the SEC and possibly the CFTC will not affect the Federal deficit because of regulatory collections from the industry.
The GOP's reckless cuts come at the same time as the new Wall Street reform requires new responsibilities. The SEC and the CFTC are now responsible for oversight of the over-the-counter derivatives market and hedge fund advisors; greater disclosure regarding asset-backed securities; and creation of a new whistleblower program. In fact, the CFTC was already responsible for overseeing actively traded futures and options contracts on U.S. exchanges, which have increased nine-fold in the last decade.
KEY DETAILS HIDDEN IN THE GOP BUDGET PROPOSALS
• One large investment bank generated $8.3 billion in profit in 2010 alone - 5 times more than the size of President Obama's funding request
• In 2005, SEC provided 19 examiners for a trillion dollars in investment under management. Today, that figure stands at 12 examiners per trillion dollars
• CFTC staffing remained level over the decade while the trading volume jumped five-fold
• In 2010, the SEC returned $2.2 billion to harmed investors, twice the agency's budget
Senator Menendez said, "Republicans are telling shady traders that Wall Street is open for business. Investors deserve more. New Jersey families and I understand the need for shared sacrifice. But no one should support opening our markets to every swindler in the world. I plan to stand up to these powerful interests and make sure we have a cop on the beat to protect confidence in the market."
"It has only been a few years since Ponzi schemes run by Bernard Madoff and Allen Stanford were unearthed. And the economy is still reeling from risky bets made by Wall Street executives," said Chairman Tim Johnson. "Wall Street Reform passed by Congress last year gave the SEC and CFTC new authorities to protect investors and prevent future crises. It is reckless and irresponsible to gut funding for these critical new protections."
"The SEC is the cop that patrols and safeguards our financial markets. No one argues we should de-fund our nation's police, stripping them of the personnel and equipment they need to keep our homes and communities safe, but that is essentially what has happened to the SEC over the past several years. At a time when the SEC's workload has grown considerably, we can't let partisan rancor hamper crucial enforcement and examination programs that are designed to safeguard our economy," said Reed.