White House plan would double SEC’s budget by 2021

Don’t expect the wish list to emerge unscathed from its trip through partisan debate, but a budget proposal announced this week by President Barack Obama would provide the Securities and Exchange Commission and Commodity Futures Trading Commission the biggest boost to their bottom lines in recent years, with plans to double their fiscal year 2015 funding by FY 2021.

The budget for fiscal year 2017, which begins on Oct. 1, also allocates more than $19 billion to strengthen cyber-security efforts, a 35 percent increase from last year’s request. With that allocation, the White House announced the creation of a Cyber-Security National Action Plan.

The regulatory aspects of the budget plan were detailed in a blog post on the White House website by economic adviser Jeffrey Zients. For fiscal year 2017, the budget includes funding of $1.8 billion for the SEC and $330 million for the CFTC, up 11 percent and 32 percent respectively. The budget also, once again, attempts a previously unsuccessful effort to enable funding the CFTC through user fees, as other financial and banking regulators do.

“Fee funding would shift the costs of regulatory services provided by the CFTC from the taxpayer to the very firms that benefit from the CFTC’s oversight,” Zients wrote.  “This is a commonsense change that is long overdue. And while the Administration is pushing for more funding for these regulators, we’ll also continue to oppose efforts to restrict the funding independence of the other financial regulators, including the Consumer Financial Protection Bureau.”

The budget also takes additional steps to reduce risk in the financial sector, including the imposition of a new fee on the largest financial firms on the basis of their liabilities.

The Cyber-Security National Action Plan establishes a Commission on Enhancing National Cyber-Security that “will bring top strategic, business, and technical thinkers from outside the government to make critical recommendations on how we can use new technical solutions and best practices to protect our privacy and public safety.” The budget would also create a National Center for Cyber-Security Resilience where companies and sector-wide organizations can test the security of systems in a contained environment by, for example, subjecting a replica electric grid to cyber-attack.

The White House plan includes promotion of multiple-point verification of online accounts, with two-step user verification, rather than traditional one-step passwords. Cyber-Security training would be offered to an estimated 1.4 million small businesses. Also, a $3.1 billion Information Technology Modernization Fund and a new Federal Chief Information Security Officer to help retire, replace, and modernize legacy IT across the government.