The Securities and Exchange Commission will receive adequate funding for 2012, but must reform its operations and rule-making processes before a significantly bigger budget is approved for the agency, Capitol Hill Republicans said.
House and Senate negotiators are trying to finalize a budget agreement for the next fiscal year before a continuing resolution expires on Friday.
Even though the agency has been lashed by the GOP ever since the party took over the House in January, a leading Republican appropriator said that the SEC won't suffer the same fate as the Commodity Futures Trading Commission, which is expected to receive $205 million for fiscal 2012 — about $100 million less than the Obama administration requested.
Rep. Jo Ann Emerson, R-Mo., chairwoman of the House appropriations subcommittee for financial services, said a compromise had been reached on the SEC's 2012 budget, but she wouldn't comment on the numbers.
“They are in a better position than the CFTC, for sure,” she said.
In September, the Senate Appropriations Committee approved a bill that would increase the SEC budget by $222 million, or 19% above its fiscal 2011 level of $1.2 billion. Earlier in the year, a House Appropriations Committee measure kept SEC funding flat.
The House-Senate budget agreement is being held up by a partisan battle over extending a payroll tax cut. If a budget for fiscal 2012 is not in place by Friday, the government would shut down.
Ms. Emerson spoke on Wednesday at a U.S. Chamber of Commerce event in Washington, where she and another GOP House colleague called on the SEC to improve its operations before receiving more federal money.
“Funding must be linked to reforms,” Ms. Emerson said. “Money alone cannot possibly solve the problems at the agency. We really do have to have an honest debate that sets expectations for the agency.”
Ms. Emerson and Rep. Scott Garrett, R-N.J., a member of the House Financial Services Committee, criticized the SEC for missteps surrounding the Bernard Madoff Ponzi scheme, a big lease deal for expanded office space in Washington that went sour and for promulgating rules that have been shot down for insufficient cost-benefit analysis.
“I would not give them an additional dime…until they make some of those changes,” Mr. Garrett told the Chamber conference.
The meeting focused on a comprehensive SEC reform report the Chamber released Tuesday. One of the recommendations says that agency's “resource-constrained examination program is untenable.”
“If an effective self-regulatory organization cannot be created, the SEC should adopt one of the several alternative approaches structured around a private sector examination program,” the report states.
In testimony before congressional committees this year, SEC officials, including Chairman Mary Schapiro, have touted operational reforms the agency has implemented over the last three years that led to a record number of enforcement cases in fiscal year 2011.
The agency also has argued that it needs increased funding to implement the Dodd-Frank financial reform law, which requires it to promulgate more than 100 new rules.
“While we have not yet had an opportunity to review the Chamber's report, the SEC has successfully implemented a number of major reforms and remains committed to additional improvements as part of an agencywide process already under way,” SEC spokesman John Nester wrote in an e-mail.