Washington, D.C. – The Bipartisan Policy Center’s (BPC) Financial Regulatory Reform Initiative’s analysis on how to improve the U.S. financial regulatory system has concluded that independent funding for financial regulators is a key element to achieving higher quality supervision and regulation. Independent funding insulates financial regulatory agencies from undue political influence while still making them accountable to Congress through required testimony, reports, and audits, as well as Congress’ authority to change statute. A new appropriations bill to be considered by a U.S. House subcommittee tomorrow would move away from that principle.
Currently, the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), Office of the Comptroller of the Currency (OCC), and Consumer Financial Protection Bureau (CFPB) have their own sources of funding. The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), on the other hand, rely on congressional appropriations. And despite having increased the responsibilities of both the SEC and CFTC following the financial crisis, Congress has not correspondingly increased the budgets of the two agencies. In its 2014 report on regulatory structure, BPC recommended that Congress give the SEC and CFTC the authority to collect and keep funds generated through fees and assessments to fund their own operations. Similarly, in its 2013 report on the CFPB, BPC supported independent funding for the bureau.
“Congress ought to strengthen regulators’ independence in a way that does not cost taxpayers a penny and also improves the quality of regulation,” said Aaron Klein, director of the Financial Regulatory Reform Initiative.
“Legislation that moves the CFPB or any other financial regulator onto the congressional appropriations system is a step in the wrong direction. Both Democratic and Republican administrations and Congresses have understood the importance of having self-funded financial regulators. They have supported that idea through prior legislation that established both the CFPB and Federal Housing Finance Agency and placed them on level footing with all bank regulators with independent funding.”
KEYWORDS: AARON KLEIN, COMMODITY FUTURES TRADING COMMISSION (CFTC), CONSUMER FINANCIAL PROTECTION BUREAU (CFPB), FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC), FEDERAL HOUSING FINANCE AGENCY, FEDERAL RESERVE, OFFICE OF THE COMPTROLLER OF THE CURRENCY, SECURITIES AND EXCHANGE COMMISSION (SEC)