U.S. Senator Charles Schumer and Securities and Exchange Commission Chairman Mary Schapiro are pushing to win self-budgeting authority for the SEC amid concern Congress may strip the measure from its regulatory overhaul.
Four former SEC chairmen joined Schumer and Schapiro on a conference call with reporters today to urge Congress to free the SEC from lawmaker-approved budgets. Schapiro said she also sent letters to Senate Majority Leader Harry Reid, a Nevada Democrat, and Minority Leader Mitch McConnell, a Kentucky Republican, seeking their support.
“When you have a measure that shifts significant funding to an agency, you can't be too careful,” said Schumer, a New York Democrat. “I would hope to avoid a fight on this issue and I think this call could help that happen.”
SEC officials have complained that stagnant budgets during the final years of George W. Bush's presidency made it difficult for the agency to keep pace with Wall Street risk-taking blamed for fueling the global financial crisis. The Senate Banking Committee approved a provision that lets the SEC determine its own funding as part of its broader financial-overhaul measure.
Schumer, who was joined on the conference call by former SEC chairmen William Donaldson, Harvey Pitt, Arthur Levitt and David Ruder, said he's concerned that Democrats and Republicans on the Senate Appropriations Committee will try to remove SEC self-funding from the legislation. Levitt is a director of Bloomberg LP, parent of Bloomberg News.
Congress approved $1.11 billion for the SEC in the fiscal year that ends Sept. 30. President Barack Obama is seeking an 11 percent increase to $1.23 billion for fiscal 2011.
The SEC collects fees from companies that register stocks and bonds with the agency and when investors buy and sell securities. The SEC sends the money to the Treasury Department, and the White House and Congress determine the agency's budget.
Schumer's plan would let the SEC retain the fees. The agency plans to collect about $1.5 billion in fiscal 2010 and $1.7 billion in fiscal 2011, Schapiro said.
“If we were to have self-funding, we'd have the flexibility and capability to adjust the fees to meet the budgetary needs of the agency,” she said.
Lawmakers have faulted the SEC for its oversight of failed investment banks and for missing Bernard Maddoff's Ponzi scheme. Schumer and Schapiro rebutted the notion that letting the agency set its own budget would make it harder for Congress to hold the agency accountable.
Congress could still convene hearings to question SEC officials, Schumer said. The
Federal Reserve and the Federal Deposit Insurance Corp. determine their funding needs and those agencies haven't escaped congressional scrutiny for decisions made during the financial crisis, Schapiro said.
Schapiro, in her letters to Reid and McConnell, noted that the SEC's 3,800 employees oversee about 11,500 money managers, 7,800 mutual funds, 5,400 brokerage firms and more than 10,000 publicly traded companies.
