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House Panel Approves $1.6 Billion SEC Budget

The House Appropriations Committee passed a bill to fund the SEC and other financial regulators for the coming fiscal year. The bill includes dozens of provisions to ease financial industry rules and diminish the power of regulators, setting up a battle with Democrats who want the riders removed.

The House Appropriations Committee on July 13, 2017, passed a bill to fund the SEC and other financial regulators for the coming fiscal year.

The bill includes dozens of provisions to ease financial industry rules and diminish the power of regulators, setting up a battle with Democrats who want the riders removed.

The 31-21 vote comes weeks after new SEC Chair Jay Clayton appeared before the Senate Appropriations Committee to defend the SEC’s flat budget request. The Senate panel has yet to produce its version of the financial regulatory appropriations bill.

The House bill provides $1.6 billion to fund the SEC’s operations in fiscal 2018, which begins in October, marking the third straight year of essentially frozen spending levels at the market regulator. The committee also agreed to set aside $245 million to fund a potential headquarters relocation for the SEC, whose D.C. leases are slated to expire over the next three years.

The measure aligns closely with President Trump’s budget request earlier this year, but tacks on a bevy of controversial riders that, if enacted, would rewrite parts of the Dodd-Frank Act and roll back other regulations.

The riders include a measure to abolish Dodd-Frank’s Volcker Rule restricting banks’ proprietary trading, strip authority from the Consumer Financial Protection Bureau (CFPB) and Financial Stability Oversight Council (FSOC), eliminate the Treasury Department’s Office of Financial Research (OFR), prohibit the SEC from requiring public companies to disclose their political spending, and ease Dodd-Frank stress-testing requirements on banks, among other changes.

Many provisions mirror H.R. 10, the Financial Choice Act, a broad Republican rewrite of the Dodd-Frank Act that passed the House on a party-line vote in June.

“Our financial system thrives on stability, and this bill provides the funding necessary for federal regulators to do their jobs in a timely and appropriate manner, while stopping burdensome regulations before they can damage our economy irreparably,” said House Appropriations Chair Rodney Frelinghuysen, a New Jersey Republican, in a statement.

Democrats on the House Appropriations Committee issued a statement criticizing the majority for passing a budget bill that “embodies the worst of the policy priorities of the Republican majority.” Democrats outside of the appropriations panel have made their grievances known, as well. Rep. Maxine Waters of California, ranking member of the Financial Services Committee, has said the appropriations bill “has been poisoned with many of the most dangerous parts of the Wrong Choice Act, which would pave the way to another financial crisis.”

Since the introduction of the Financial Choice Act, Waters and other critics have refused to use the bill’s title, instead deriding it as the “Wrong Choice Act.”

The Volcker Rule restricts federally insured banks from making short-term proprietary trades and prohibits them from investing in private equity funds and hedge funds. Republicans have sought for years to roll back the Volcker Rule, and it would be abolished under both the Choice Act and the House budget bill.

The CFPB, a Dodd-Frank agency that regulates the consumer finance market, would be placed under the congressional appropriations process, and it would lose some of its enforcement and regulatory powers.

The FSOC, also created under the 2010 Wall Street reform law, would lose its power to designate large insurers and other nonbank financial institutions as systemically risky, a tag that imposes additional capital requirements and tighter supervision from regulators.

Totalling about $20 billion, the fiscal 2018 Financial Services and General Government Appropriations bill also funds the Treasury Department, the IRS, the Small Business Administration, the Commodity Futures Trading Commission, the Federal Election Commission, and other agencies.