Why Is Congress Defunding Financial Regulation?
It's only been a few years since one of the country's worst financial collapses destroyed the economy but already, the regulatory apparatus designed to prevent another such a catastrophe is being gutted by House Republicans.
It's only been a few years since one of the country's worst financial collapses destroyed the economy but already, the regulatory apparatus designed to prevent another such catastrophe is being gutted by House Republicans. On Tuesday, the House Appropriations Committee voted to cut funding for the Commodity Futures Trading Commission, the signature enforcer of the Dodd-Frank law passed in the aftermath of the financial collapse. To refresh your memory, that's the commission in charge of derivatives, those complex financial instruments Warren Buffett called "financial weapons of mass destruction." Sure, 2008 seems like a long time ago and nobody thinks Dodd-Frank was perfect but isn't defunding the "too big to fail" bill a tad suicidal? There are two basic ways to look at the rationale for defunding:
Republicans are in bed with the banks and they want Obama to fail. To get a sense of how angry the GOP is making Obama, you just need to look at one figure: $308 million. That's the amount the Obama administration says is required for CFTC to implement the Dodd-Frank law. Today, House Republicans balked at the figure and approved a mere $180 million, reports The Hill's Erik Wasson. To California Democrat Sam Farr, whose amendment to provide at least $224 million was defeated, the rationale was puzzling. “Why would we, when the fire is burning, want to recall the fireman?” he asked the committee.
One reason for recalling the fireman is if you're being paid boatloads of money to do it. Since 2010, Wall Street has shifted its support from President Obama to Republicans as it seeks to resist efforts to further regulate it (in some cases, bringing in two-thirds more Wall Street money to the GOP). Democrats, such as Think Progress's Pat Garofalo, have cited as evidence statements by Republican Congressman Spencer Bachus, the chairman of the House Financial Services Committee, that he's in bed with the banks. “In Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks,” he told The Birmingham News. Another reason for recalling the fireman is if you never wanted him there in the first place. The Dodd-Frank bill, if you remember, passed along rigid partisan lines. Since Republicans didn't support it then, it's not surprising they're not overjoyed about funding it now. But Republicans say neither of those reasons hold up.
The Commodity Futures Trading Commission is over-funded and ineffective. With budgets tight across the government, Republicans say the CFTC is one of the more deserving places to cut. “This is not an impoverished agency,” Rep. Jack Kingston said today. He mentioned that 82 percent of CFTC staff rake in more than $100,000 per year and waste money on exorbitant conferences and travel costs. "He argued that the number of transactions CFTC now oversees has only increased 0.2 percent and that the agency has failed to police MF Global and JPMorgan Chase," reports The Hill. He added “We are not seeing the regulatory result for the money we have already spent on CFTC." That, coupled with the GOP's natural disposition not to support regulation, makes the CFTC a natural target of GOP cuts.