Sometimes it seems as if Congress has completely forgotten that there was a financial crisis just a few years ago that cost Americans trillions in wealth and eight million jobs.
Though financial reform became law in 2010, the implementation of Dodd-Frank’s new guidelines and enforcement mechanisms have been slowed and weakened by the overwhelming influence of banking lobbyists.
What’s even more concerning is that existing regulations cannot be properly enforced without sufficient funding from Congress.
At a hearing called “Mitigating Systemic Risk in Financial Markets Through Wall Street Reforms,” Securities and Exchange Commission (SEC) chair Mary Jo White and Commodity Futures Trading Commission (CFTC) chair Gary Gensler both told Senator Elizabeth Warren (D-MA) that they’re lacking in resources to do the job of policing the world’s largest financial corporations.
“There’s no question that additional resources are essential to our successful enforcement strategy,” White said, noting that they need funding for additional trial attorneys so they can go to court against violators.
“We need resources across the board for many other things as well,” she said. White noted that the SEC is budget-neutral and deficit-neutral, meaning that enforcements end up paying for themselves due to fines collected.
“I would say our enforcement resources are tiny compared to the size of the markets,” the CFTC’s Gensler added. “You know the American public put $180 billion into AIG [the insurance company taxpayers bailed out], that’s 600 times what the president asked for [to fund] our agency. Our enforcement folks are only about 150 of our people. And unfortunately we’re trying to make the best decisions but often we have to delay justice because we don’t have the right resources.”
“You know, it seems clear that if Congress wants to have a tough watchdog,” Senator Warren said, “it has to make sure the dog hasn’t been starved.”