WASHINGTON (CN) – Two federal regulatory agencies are seeking budget increases to meet new demands arising from proposed financial overhaul legislation. The Securities and Exchange Commission and the Commodity Futures Trading Commission both asked the Senate Appropriations Subcommittee for budget increases on Wednesday.
SEC Chair Mary Schapiro testified that her agency’s request for a 13 percent increase for fiscal year 2011 will “reinvigorate” the commission, which she says is challenged by understaffing.
Schapiro says the commission currently relies on 4,000 individuals to monitor 35,000 entities, but a budget bump-up would allow for additional new hires.
“More staff means more investigations and more trials,” Schapiro said.
Schapiro also requested funds for new technology, acknowledging that although the agency will never match the technology used by big law firms and Wall Street firms, the SEC needs updated technology to sift through the “vast mountains of data” it intakes.
She said the budget increase is crucial to the agency’s main priority, which is to “restore investor confidence.”
The SEC’s proposed budget would be $1.2 billion, $24 million of which depends on the passage of financial reform legislation.
CFTC Chair Gary Gensler said his agency’s request for $261 million, 54 percent more than last year, is backed by the approaching need for government oversight of the derivatives market, a segment of the proposed financial overhaul. Almost a fifth of the agency’s request, $45 million, is contingent on passage of the financial reform bill.
Under the new bill, derivatives trades would move through clearinghouses, giving more visibility to trades that used to be conducted in the “shadow economy.” Gensler said that clearinghouses would “better enforce and police the market for manipulation and fraud.”
As part of the regulatory build-up, Gensler said they would have to increase the levels of expertise in different commodities markets, such as corn and wheat.
“Humility suggests that we will learn a lot along the way,” Gensler said. “As a nation, we have never regulated these products.”