President Trump’s fiscal 2020 budget would subject two post-crisis financial regulatory offices to congressional appropriations, limiting their ability to act on their own.
The offices, the Financial Stability Oversight Council and the Office of Financial Research, were created by the 2010 Dodd-Frank financial regulatory legislation enacted by President Barack Obama and Democrats in response to the financial crisis.
The FSOC is a regulatory supergroup chaired by the treasury secretary and consisting of the heads of the federal financial regulatory agencies. It is tasked with preventing another financial crisis and has authority to identify nonbank companies that need additional oversight. The OFR, meanwhile, provides financial data for regulators and lawmakers to use in monitoring the financial system.
Both are funded by a fee the Treasury Department assesses to banks deemed to be systemically important to the global financial system. The Trump administration’s proposal would do away with that mechanism and place them under the standard congressional funding process.
The budget proposal said that the current setup “circumvents congressional approval and oversight.”
The budget does not say what level of funding they should receive.
The change in funding structure for both is supported by the banking industry and was included as a recommendation in a Treasury Department report on restructuring the financial regulatory system in 2017.
The White House also proposed eliminating the Community Development Financial Institutions Fund, an office within Treasury that provides grants to community development organizations. The Trump administration proposed eliminating the program last year as well.
The budget released Monday also includes a $11.5 billion funding request for the Internal Revenue Service, about $370 million more than the administration asked to go to the tax collection agency in last year’s budget. $290 million of that request goes toward IT modernization work for the IRS.
