Congressional leaders averted a government shutdown by striking a deal late Thursday on a nearly $1 trillion spending bill to keep the government running until next fall. The spending plan was approved by a 296-121 vote by the House of Representatives on Friday, and the full Senate was expected to vote on the bill later Friday.
However, negotiations are still taking place on extending the payroll tax cuts and unemployment insurance, which both expire at the end of the year. Published reports said that Senate Majority Leader Harry Reid, D-Nev., and Senate Minority Leader Mitch McConnell, R-Ky., were confident that a long-term deal could be reached soon, but if not, that Democrats were preparing a temporary two-month payroll tax cut extension.
The spending bill contains $21.5 billion for agencies and programs within the financial services category. This total is $222 million below last year's level and $4.2 billion below the Obama administration's request.
The spending bill upholds the overall regular (base) discretionary level of $1.043 trillion as agreed to in the Budget Control Act. When combined with the previous "minibus" Appropriations bill enacted in November, total discretionary funding for FY 2012 will equal $1.043 trillion. That would be $7 billion less than last year's level of $1.050 trillion and $98 billion less than the President's request.
Chief among the allocations is $1.3 billion for the Securities and Exchange Commission, which is $136 million over last year's level and $86 million below the administration's request. The legislation also rescinds $25 million from the new Dodd-Frank mandated "reserve fund"–a fund for the SEC for programs that Congress has not approved.
However, industry officials note that the $1.3 billion appropriation for the SEC still falls short of the $1.5 billion authorized under the Dodd-Frank Act for 2012, and that the increased funds will likely not be enough to help the agency boost its examination of advisors and therefore stave off the possibility of a self-regulatory organization for advisors.
"The appropriation for next fiscal year continues to be a band-aid approach to regulating the financial services industry," says Duane Thompson (left), senior policy analyst for fi360. "Like the banking regulators, Congress should provide for self-funding by the SEC to respond to future growth in registered investment advisors and rebuilding its technological infrastructure."
