Cuts will stifle, SEC chief warns
Securities and Exchange Commission budget cuts sought by Republican lawmakers would force staff furloughs, halt technology improvements, and block implementation of Dodd-Frank Act rules, the SEC chairwoman, Mary Schapiro, said yesterday.
“All those areas would be profoundly impacted, and we would have to make some extremely difficult choices,’’ Schapiro told Senate Banking Committee members at a Washington hearing.
Schapiro and five unit chiefs testified at House and Senate hearings on SEC spending amid Republicans calls to slash the agency’s budget by $25 million over the next six months. The SEC officials pressed their case for funding to carry out new duties imposed by the financial regulation overhaul and boost market oversight after missing Bernard Madoff’s Ponzi scheme.
Federal spending for the current fiscal year — including the SEC budget — has been frozen at fiscal 2010 levels by a congressional standoff as Republicans who control the House push to cut spending across the board to reduce the federal deficit. President Obama’s 2012 budget, released Feb. 14, would give the agency a $305 million increase from the 2010 level and a 16 percent increase in staff.
The budget impasse is keeping the agency from improving its market surveillance capabilities, which have been “severely limited by our lack of technology,’’ Schapiro said, citing it as one of the main areas where the new funding would be used.
Senator Jack Reed, the Rhode Island Democrat who led a hearing of a subcommittee of the Banking, Housing, and Urban Affairs Committee where Schapiro testified, said some Republicans are targeting the SEC budget in “a very, very misguided’’ effort to undermine the regulatory overhaul.
Representative Scott Garrett, the New Jersey Republican who led a hearing of a subcommittee of the Financial Services Committee where the unit chiefs appeared, said lawmakers are seeking results that justify additional funding rather than trying to “starve’’ Dodd-Frank.
Schapiro also testified at a hearing of a subcommittee of the House Oversight and Government Reform Committee about former general counsel David M. Becker’s role in the agency’s policies related to Madoff. Becker, 63, stepped down last month after he was sued over profits he inherited from his parents’ holdings with the imprisoned money manager.
“I wish that Mr. Becker had recused himself, absolutely,” Schapiro said. “It would have been appropriate.”
