The Republican chairman of the House Financial Services Committee proposed restructuring the Securities and Exchange Commission on Tuesday, saying he wanted to make the agency more efficient and correct its “organizational incoherence.”

“Without fundamental reform, there will never be any real improvement to the SEC’s operations,” Rep. Spencer Bachus (R-Ala.) said in a statement.

But the top Democrat on the committee said the proposal was the work of idealogues who oppose regulation.

“It’s an excuse for continuing to underfund the agency,” Rep. Barney Frank (D-Mass.) said.

Bachus’s proposal, which he said will be called the “SEC Modernization Act,” would demote the agency’s investor advocate, folding that office into another unit.

In contrast, the plan would give higher rank to a new ombudsman who would field complaints from businesses the SEC regulates.

The plan would break up the office of watchdogs who inspect businesses such as brokerages and managers of investment funds. The examiners would be spread among other divisions that write rules for the financial industry. Those other divisions have been more sympathetic to industry, some observers said.

Folding the examiners into other divisions would reverse a step Arthur Levitt Jr. took when he was SEC chairman during the Clinton administration. Levitt said in an interview Tuesday that he established a separate office for inspectors and examiners to give them greater independence after concluding that “the regulators were captured by the regulated.”

Levitt said “modernization” would be a misnomer for Bachus’s proposal.

“It would be more appropriately called evisceration,” Levitt said.

Bachus’s proposal brought into sharp focus a largely partisan clash over the SEC, which is responsible for regulating Wall Street.

Democrats have given the agency broader powers and responsibilities and have argued that it needs additional funding to prevent debacles such as Bernard L. Madoff’s Ponzi scheme and the financial meltdown of 2008.

Republicans have emphasized SEC missteps, from failing to stop Madoff to signing a $557 million lease for office space the agency did not need and could not afford. Some have argued that the SEC has not earned a bigger budget.

Bachus said his proposal was inspired in part by a federally mandated study of the SEC completed this year by the Boston Consulting Group (BCG). The study called for the SEC to “[s]ystematically redesign” the way it is organized, and it said one option was to merge the examiners into the rulemaking divisions.

With 24 offices reporting directly to its chairman, the SEC faces a management challenge, BCG reported.

SEC spokesman John Nester said the agency is reviewing “a number of similar recommendations from the BCG study.”

The agency could more flexibly adapt to changing conditions if it reorganized itself instead of having a restructuring written into law, he added.

The BCG study said that unless Congress increased its budget, the agency would have to make “hard trade-offs in terms of mission critical activities.”

Although Congress controls how much the agency can spend, the SEC gets its money through fees levied on businesses rather than from tax revenue.

The vast restructuring Bachus proposed will only distract the SEC from policing the financial markets, said Amy Borrus, a spokeswoman for the Council of Institutional Investors.

“Instead of trying to reshuffle the boxes at the SEC, Congress should be making sure the agency has the resources it needs,” Borrus said in an e-mail.