Thursday’s hearing before the Senate Committee on Banking, Housing, and Urban Affairs put Mary Schapiro, chairman of the SEC, in the hotseat as committee members voiced their own views on the need for funding, and heard her testimony regarding the proposed 2012 budget and how it would affect the agency.
Currently the SEC is operating, as is the federal government, on a continuing resolution (CR), with the possibility of more CRs as budget battles continue in Congress. Schapiro testified about the effect of successive CRs on the ability of the SEC to do its job, as well as on a number of other matters.
Sen. Jack Reed, D-R.I., spoke first, comparing the SEC to “the cop that patrols the streets.” While no one would consider, he said, withholding resources from the nation’s police, “in some respects that hasn’t happened with the SEC.” Adding that while some say SEC funding is unaffordable, he pointed out that funding comes from “Wall Street regulation and filing fees,” so the agency’s budget has no effect on the federal deficit.
He also brought up previous testimony by Schapiro, in which she had said that some of the companies the agency must regulate spend more on IT in a year than the entire agency’s budget. “That’s like trying to catch a fast sports car with my 1991 Ford Escort,” said Reed. “Won’t happen.” He added that if the SEC is denied resources, in effect, there would be “no cop on the beat”; this would, he said, endanger economic growth and possibly lead to yet another financial crisis.
Questions posed by Reed, Sen. Robert Menendez, D-N.J.; Sen. Mark Warner, D-Va.; Sen. Kay Hagen, D-N.C.; and Sen. Mike Crapo, R-Ind., the only Republican who chose to speak during the hearing, covered various aspects of the budget issue, from how well the SEC is managing to function under a series of CRs to how efficiently the agency uses the money already available and what it would do with additional funds should full funding be approved.
Schapiro testified in response to Hagen’s question that, while the SEC was accustomed to working under CRs, they affected its ability to attract and hire personnel with the knowledge and experience that would enable them to better fulfill their mission of protecting investors and restoring confidence in the markets. She pointed out that the flash crash alone had caused a serious drop in investor confidence that was ongoing,