WASHINGTON — Brooksley Born, the former chairman of the Commodity Futures Trading Commission who became a folk hero for her warnings about the risks posed by derivatives, joined House Democrats on Friday to protest Republican-proposed cuts to the agency's funding.
"The proposal poses a serious threat to the CFTC's ability to fulfill its statutory mandate under the Dodd Frank Act to regulate over-the-counter derivatives," Born said in prepared remarks at a Capitol Hill press conference.
"The CFTC is desperately in need of additional funding. It currently has only about 10 percent more staff than it did when I was chair of the CFTC in the last 1990s. The CFTC was stretched thin even then. Yet its responsibilities are now so much greater."
Earlier this week, the Republican-led House appropriations subcommittee on agriculture voted to allocate the agency $180.4 million for the next fiscal year, with $32 million of that total restricted for expenditures on information technology.
The agency's budget in the current fiscal year is $205 million, with $45 million restricted for IT spending.
The CFTC received $203 million in the previous fiscal year, and hadn't gotten less than $180 million since prior to the passage of the Dodd-Frank Act, which substantially expanded the CFTC's responsibilities.
With Democrats and Republicans largely in a stalemate over financial regulatory policy, the CFTC's budget has become a partisan battleground. Democrats have consistently sought more funding, Republicans have pushed for less, and each year a compromise has eventually been reached.
Rep. Barney Frank, who organized Friday's press conference and has been leading the Democrats' charge in the battle of CFTC funding, said that the GOP proposal is a reflection of what he called "terrible priorities."
"At a time when JPMorgan Chase has reported the loss of $3 billion or more in the derivatives markets, the Republicans are refusing to appropriate a small percentage of that amount to provide the protections we need against a return to financial chaos," he said in a press release.