Obama proposes large budgets boosts for SEC and CFTC

The Obama administration, under fire for a dearth of significant prosecutions related to the 2007-2009 financial and housing market meltdown, also called for adding $55 million to the Justice Department's proposed budget to prosecute financial crimes.

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That would bring the proposed budget for such prosecutions to over $700 million, which would fund more FBI agents, prosecutors and forensic accountants. The overall discretionary budget for the Justice Department would go down less than 0.5 percent to $27.1 billion.

The proposal comes shortly after the president announced the creation of a new working group to further investigate misconduct in the pooling and sale of home loans during the financial crisis.

The proposed budget hikes, however, are a long shot.

Republicans who control the House of Representatives have questioned funding boosts for regulatory agencies as they look to cut government spending and seek to throttle the implementation of the 2010 Dodd-Frank law by starving regulators of additional funds.

Last year, both the SEC and CFTC received far less than what they had requested.

"There is still along way to go in the appropriations process and this is just the opening round," said Jim Overdahl, a vice president at NERA Economic Consulting, and a former chief economist at both the SEC and CFTC.

The proposed funding increase comes as the SEC and CFTC face a daunting to-do list.

In addition to facing major work on implementing new rules to oversee the over-the-counter derivatives market, the CFTC is also straining its limited resources to conduct an investigation into the October collapse of brokerage firm MF Global and the massive shortfall in customer money.

The SEC, meanwhile, is working on a series of reforms following the May 6, 2010, "flash crash" while also trying to develop proposals to bolster capital formation for smaller businesses.