Wall Street to GOP: Don't Cut SEC Funds
The Hill reports:
A rift is emerging between congressional Republicans and the financial-services industry over the funding of Wall Street’s watchdog: the Securities and Exchange Commission (SEC).
Republicans, riding campaign promises to cut spending, have had tough talk for the agency and its failings since before the financial crisis. But the financial industry worries that scarce funds are hampering the SEC’s work and could actually increase the burdens created by the Dodd-Frank financial reform law as stretched-thin regulators have to do more with less.
“There’s a real disconnect,” said Stephen Crimmins, a partner at K&L Gates LLP, who worked at the SEC for 14 years.
Republicans were aligned with much of the financial sector in opposing President Obama’s overhaul of Wall Street’s rules, and the new House GOP majority is keen to present a pro-business image.
But Republicans are also battling the administration over burdensome regulations, and are in no mood to provide funding to strengthen regulations they fought against in the minority, even if some of the firms being regulated support the funding.
“It’s only in government, especially in Washington, where you have agencies that failed in their core assignments in the past, and yet they are rewarded with more authority and bigger budgets,” Rep. Scott Garrett (R-N.J.) told The Hill last month.
While Republicans continue to fight the fight, Wall Street seems to have moved on and is now focused on getting the best rules possible from regulators implementing the law.
Tim Ryan, president and chief executive officer of the Securities Industry and Financial Markets Association (SIFMA), said last month that the Dodd-Frank fight was over.
“Today, the industry’s view as expressed by SIFMA is Dodd-Frank is the law,” said Ryan. “We are all about providing substantive input so that the government produces final regulations that make sense.”
Both the SEC and Commodity Futures Trading Commission (CFTC) were handed significant new responsibilities by the Dodd-Frank law, but thanks to a budget standoff are still operating at pre-Dodd-Frank levels.
Agency officials have warned that they do not have nearly enough resources to handle their current workload, let alone new responsibilities.
SEC Chairwoman Mary Schapiro, who wants to hire 800 new employees to implement Dodd-Frank, has struck a dire tone about the agency’s budget situation. Earlier this month she said that the penny-pinching was having an adverse impact on the agency’s “core mission,” let alone Dodd-Frank obligations.
Wall Street groups have largely tried to stay out of the spending fight, but a group of securities lawyers, including several who used to work for the SEC, are calling on Congress to authorize a bigger budget for the agency.
A group of 41 securities lawyers, led by Crimmins, sent a letter last month to top congressional lawmakers asking for substantial increases to the SEC’s budget.
The attorneys warned that an SEC starved of funds would endanger America’s dominance in the capital markets, as investors would shy away from a market that was deemed to have an inadequate regulator.
“The regulator of our capital markets is running almost on empty,” they wrote. “Investors sidelined with decimated 401(k)s will be unwilling to again risk their capital if Wall Street’s cop-on-the-beat increasingly comes to be seen by the public as a cop-on-furlough.”
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