The Commodity Futures Trading Commission, perhaps the biggest loser in the appropriations deal secured last week, may lose staff after their budget was cut by 1/3 from the President’s budget request. This comes at a time when the CFTC takes on expanded responsibilities in the wake of Dodd-Frank.

It’s a remarkable situation that underscores the relentless guerrilla war the White House faces in trying to get the resources it wants to take on the multitrillion-dollar derivatives market. It also puts the House Appropriations Committee in a pickle at a time when conservatives already accuse its Republican leadership of being too responsive to President Barack Obama’s demands.

Indeed it was the House GOP negotiators — opposed to the Dodd-Frank financial reforms enacted last year — who drove the CFTC budget bargain and held the 2012 appropriation to $205.3 million, a virtual freeze at 2011 levels and a one-third cut from Obama’s request.

In normal circumstances — especially given recent federal pay freezes — the agency might have rolled with the punch. But in this case, the CFTC’s flexibility is limited by the fact that the same deal specifies that more than a quarter of its budget, or $55 million, must go to long-term information technology investments.

So one-quarter of their budget has to go to updating IT. In that sense, the cut is even more exaggerated. And again, they have more responsibilities at this point. Yet they may cut up to 8% of staff.

This is how Dodd-Frank gets “repealed,” by the way. The agencies that are tasked with executing the law are being gutted. As a result, even if bank lobbyists don’t succeed in watering down the rules, the too-small budgets mean that the rules cannot be enforced. This is where Congress holds power, in setting budgets and in confirming regulators. The lack of a head of the Consumer Financial Protection Bureau has led to a gap in regulation of non-bank financial institutions on consumer protection issues. The slashing of the CFTC leads to decreased oversight over derivatives. And on and on.

Even if Dodd-Frank was an airtight law – which it isn’t – this would be a challenging environment under which to execute the law. As it is, it’s almost impossible.