SEC chair says agency's frozen budget is hurting its core mission

Mary Shapiro, chairwoman of the Securities and Exchange Commission, warned Friday that her agency can't properly carry out its mission because its budget has been frozen while its workload has climbed sharply.

"Unfortunately, we've been operating under a continuing resolution that has hampered our ability to do what investors and capital markets deserve," Schapiro said in a speech to the Practicing Law Institute.

The Obama administration had requested a 10 percent increase in the SEC's budget for this year to $1.25 billion, in part to carry out a slew of new responsibilities under the Dodd-Frank financial reform law. But Congress has been funding the government under a series of continuing resolutions that simply maintained funding at last year's levels.

Shapiro had already postponed work on rulemaking tied to Dodd-Frank, citing the agency's funding squeeze. But Friday, she said the agency is also struggling to keep up with the growing workload under its existing responsibilities.

"It is a strain that is already having an impact on our core mission, separate and apart from the new responsibilities that Congress gave us to regulate derivatives, hedge fund advisers, and credit rating agencies. It is a strain that will intensify the longer the budget remains at existing levels," Schapiro said.

The current CR was enacted in December and expires March 4. The stop-gap funding measure was put in place by Congress after Republicans refused to support an omnibus spending package drafted by Democrats that would have increased the SEC's budget.

Schapiro's comments come as House Republicans are expected to unveil legislation that will replace the current CR, but will include about $34 billion in cuts from current levels to 11 of the 12 annual appropriations bills for the rest of the fiscal year. The financial services appropriations bill, which funds the SEC, is slated to be cut by $3 billion, or 13 percent, from fiscal 2010. The House is expected to act on the bill the week of February 14.

Schapiro said that the agency's responsibilities are growing not only from new legislation, but increased trading volumes and cuts to her workforce.

"During the past decade, trading volume has more than doubled, the number of investment advisers grew by 50 percent, and the funds they manage have increased to $38 trillion," Schapiro said. "Our workforce had already been cut in the years preceding the financial crisis - and had only just been getting back to pre- crisis levels."

She added that "a number of the financial firms we regulate spend many times more each year on their technology budgets alone than what we spend on our total operating costs.

"So we need to ask ourselves if we want our market analysts to continue to use decades-old technology to recreate market events or to monitor trading that occurs at the speed of light," Schapiro said. "We need to ask ourselves if we want our chief securities regulator to have to pull the plug on data management systems and on a digital forensics lab needed to recreate the data that sophisticated fraudsters leave on hard drives and iPhones.

"These are the questions we're confronting even as we implement our new responsibilities for hedge funds, derivatives, and credit rating agencies," Schapiro concluded.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

    Download
  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

    Download
  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

    Download
  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

    Download
  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

    Download
  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

    Download
  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.

    Download

When you download a report, your information may be shared with the underwriters of that document.