SEC chief backs self-funding
Securities and Exchange Commission Chairwoman Mary Schapiro Wednesday voiced support for a provision in Senate financial regulatory overhaul legislation that would allow the agency to self-fund its budget by retaining fees it collects.
Schapiro was asked about the provision included in the overhaul measure of Senate Banking Committee Chairman Christopher Dodd, D-Conn., following a House Financial Services Appropriations Subcommittee hearing on the SEC's fiscal 2011 budget request. She said that while the level of funding provided to the SEC by appropriators in recent years "has been great, it's very important" for the agency to have the stability of self-funding. She said it would "give us the ability to respond to changes" more quickly, add staff when needed and do long-term technology and resource planning.
The fiscal 2010 funding for the SEC was $1.1 billion, a $151 million increase over fiscal 2009. However, Sen. Charles Schumer, D-N.Y., who has been pushing to make the SEC a self-funded agency, said in November that the agency collected $1.5 billion in fees in 2008. The agency has requested $1.26 billion for fiscal 2011.
The issue of allowing the agency to be self-funded did not come up during the hearing. While noting that the SEC must not allow the agency's failures to be repeated, the subcommittee's leaders voiced support for the job Schapiro is doing and pledged to provide her with the resources she needs to ensure both investors and the public have confidence in the SEC.
While lawmakers "expect a lot from the SEC, we stand ready to support you," Financial Services Appropriations Subcommittee Chairman Jose Serrano, D-N.Y., told Schapiro.
Schapiro was questioned about a report released last week on the September 2008 bankruptcy of Lehman Brothers that found the firm used accounting gimmicks to hide $50 billion in debt. Schapiro said the SEC is looking very closely at the conduct of a number of firms prior to the financial meltdown of late 2008, though she declined to provide any names.
Rep. John Culberson, R-Texas, also questioned Schapiro about why SEC employees are not prohibited from working for firms the SEC regulates for a certain amount of time after leaving the agency.
"We want to bring in the best and the brightest," including those from Wall Street who understand how the financial industry works and can help find problems, Schapiro said. "At the same time, if you tell them they can't go work for five years in this industry, we will have a difficult time bringing in the people we need," she said.
"It's a bad idea," Culberson responded. "I think you should think about doing away with it." Schapiro agreed to look into changing the agency's policy on the issue.