Commissioners of the Securities and Exchange Commission went to Capitol Hill yesterday to argue vigorously against a proposed 12 percent cut in the agency's funding, which they said would endanger the country's securities markets.
A 12 percent cut such as has been proposed by the Office of Management and Budget for federal agencies including the SEC would "just demoralize the staff" and seriously limit its ability to enforce securities regulations, Chairman John S.R. Shad said.
"I don't think we have enough budget right now to do the job we're supposed to do. We haven't for five years," Commissioner John Evans said. "We're a good agency--but you get what you pay for. . . . There will be more frauds, I can assure you."
Shad argued to a House appropriations subcommittee that the SEC is a cost-efficient agency that already generates approximately 81 percent of the money needed to finance its expenditures by filing and transactions fees. Those fees amount to 79 ten-thousandths of one percent of the principal amount of filings and transactions and--if increased to 102 ten-thousandths of 1 percent of that amount--would provide the full amount proposed for the agency by the OMB last March.
Appropriations subcommittee Chairman Neal Smith (D-Iowa) said he believes that two House members, Rep. John Dingell (D-Mich.) and Rep. Timothy Wirth (D-Colo.), are discussing introducing legislation that would permit such a fee increase.
Dingell, chairman of the House Committee on Energy and Commerce, and Wirth, whose subcommittee handles authorizing legislation for the SEC, both weighed in on behalf of the agency at the Appropriations Committee hearing. In a statement submitted to the appropriations subcommittee, Dingell called the proposed cut "an ill-advised and potentially devastating proposal--crippling to the commission's ability to carry out its mandate and crippling to our national goal of economic recovery."
"Today the SEC has a smaller staff than in any year since 1974," Wirth said. "Based upon these facts alone, the SEC could certainly make a case for more, rather than fewer, personnel."