Rep. Barney Frank, D-Mass., accused House Republicans on Tuesday of trying to defund the Dodd-Frank financial overhaul that he championed last year.
Frank, now the ranking Democrat on the House Financial Services Committee, said that GOP lawmakers are out to sabotage the act under the guise of deficit-cutting.
"The Republicans will defund the agencies effectively not because [of the deficit]--this is relatively small compared to what is spent at the Pentagon and elsewhere--but because they are philosophically opposed to this kind of regulation," he said. "And I don't think the public wants to go back to the days of unrestrained trading and derivatives."
Republicans have threatened to scale back funding for the Securities and Exchange Commission and the Commodity Futures Trading Commission beyond 2010 levels, an outcome that Frank and his Democratic allies say would cripple the government's ability to enforce Dodd-Frank and other laws.
According to Frank, the SEC is feeling the effects of insufficient money because of the continuing resolution passed in December that kept funding static. That has prevented the commission from pursuing investigations, upgrading its technology to keep pace with sophisticated trading techniques, and adding staff well-versed in technical topics essential to policing securities markets, he said.
"These agencies are already starting to be hurt by a freeze in funding at 2010 levels," said Rep. Carolyn Maloney, D-N.Y., the ranking member on the Financial Services Subcommittee on Financial Institutions and Consumer Credit. "We're already hurting."
President Obama's request for the current fiscal year called for a nearly 70 percent increase in funding to $286 million for the CFTC, with much of that additional money going to implement financial reform. The SEC request represented a 12.5 percent increase to $1.258 billion.
Frank pointed to similar efforts surrounding the less controversial Sarbanes-Oxley law several years ago, but he said that by comparison the level of congressional opposition to the Dodd-Frank regulations was notable.
"I am surprised at the vehemence of their assault on the CFTC," he said. "I would have thought that even among people in the tea party, credit default swaps would not be that popular."
Rep. Scott Garrett, R-N.J., a member of the Financial Services Committee, responded by calling for the SEC and CFTC to stay within their current budgets in light of the country's record deficits: "A dramatic spending increase to fund the SEC and CFTC, as envisioned by the authors of the Dodd-Frank legislation, would further the mindset that our nation's problems can be solved with more spending, not more efficiency," Garrett said in a statement.
This article appears in the January 25, 2011, edition of National Journal Daily PM Update.