The latest federal spending plan, pushed through by Republicans in the House, would reduce the CFTC budget by a third. Democratic President Obama would increase the budget by 80%.  Some top regulators of the derivatives industry say that any funding cuts, large or small, would be disastrous for the overseeing the $600 trillion industry.

It's crunch time for the CFTC, which has until July to complete new regulations for the derivatives industry - a deadline set by the Dodd-Frank Reform Act.  But CFTC Chairman Gary Gensler has found it difficult to write the Dodd-Frank regulations on a shoe-string budget.  At Thursday's hearing, the Commission considered several new regulations, including one to clarify which trading practices the agency might ban.  CFTC Commissioners voted 4:1 in favor of opening the plan for a 60-day public comment period.  Once the period closes, the agency must vote on a final version of the proposal.

CFTC Commissioner Bart Chilton says that the budgeting issues not only impact the writing of future regulations, but will render as meaningless new rules and regulations that were written since July 2010, because the Commission would be able to enforce them.

In the meantime, ongoing delays that result from political stalemates will continue to set back regulatory reform, even if funding is ultimately provided.   [NYT Dealbook, 2/24]