WASHINGTON (Reuters) – The chairman of the Senate’s securities subcommittee said he will insist on adequate funding for financial regulatory agencies as a pre-condition for a federal budget deal.
“I’m certainly advocating that. I can’t speak for all of my colleagues, but I think we have to make the case publicly that this is one of those issues which is central to the way markets operate,” Democratic Senator Jack Reed told the Reuters Future Face of Finance Summit on Tuesday.
U.S. House of Representatives Republicans, aiming to combat the federal deficit and roll back policies they oppose, are trying to restrain funding for the Commodity Futures Trading Commission and the Securities and Exchange Commission.
Both agencies say they need more money and staff to implement scores of new rules mandated under last year’s Dodd-Frank Wall Street reform law, approved in response to the economically devastating 2007-2009 financial crisis.
Funding for the two agencies hinges on the outcome of a partisan dispute over the deficit-laden federal budget. The House was expected to vote later on Tuesday on a temporary budget measure that will allow further negotiations.
If a short-term budget agreement is not reached soon, the government will run out of money on Friday and some nonessential services will stop. Both Republicans and Democrats have inched back in recent days from a shutdown.
“Shutting down the government at this point would not be helpful,” Reed said. “We have huge instability in the world. North Africa is transforming itself as we speak … You’ve got oil prices that are sensitive. So the shock of a shutdown in the U.S. government could have unintended consequences that are staggering in terms of market reaction” and more widely.
He also cited recent studies that say the deep spending cuts sought by House Republicans would destroy hundreds of thousands of jobs and damage the fragile economic recovery.
“If the goal is to put people back to work and get the economy going, this is not the best plan that they’ve proposed. I hope they recognize that,” Reed said.