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Sunday, October 20, 2002
The White House attempts to reduce SEC funding, and Democrats are handed a winner of a campaign issue. In today's NYT, we have reports that the administration is seeking a budget increase only about one third the size of the one it proposed not long ago in the Sarbanes-Oxley Act. This is the ultimate flip-flop for a president who promised at the end of July:"Corporate misdeeds will be found and will be punished," Mr. Bush said then. "This law authorizes new funding for investigators and technology at the Securities and Exchange Commission to uncover wrongdoing." The numbers get a bit complex in the story, with different dollar amounts and percentages jumping in from all directions. Essentially, the SOA authorized an increase from around $438 million to $776 million. W now wants that figure to be $568 million.
Later on in the article, the NYT claims that part of the original proposed increases was "$108 million for better computer systems and financing for restoring the agency after the Sept. 11 attacks that destroyed its New York offices." Exactly how much of that is for the former and how much for the latter is not stated, which is a shame, since whatever was going to rebuild offices shouldn't really count against the agency, while that $108M figure leaves only $30M more under Bush's new proposal.
Assumedly, all of the approved funding was deemed necessary to bring the SEC up to par with its responsibilities. Giving a sense of its current ability to meet its goals, there is this compelling comparison: "And one investment house alone, Merrill Lynch, has more professionals in its legal and compliance departments than the commission's entire enforcement staff."
Ari Fleischer's only response is weird and seemingly off-topic: "Typically, when Congress leaves, they pay an exit fee, where spending is increased above and beyond what the Congressional budget authorized, and the taxpayers are always the victims," Mr. Fleischer said. "This year, the chain was broken."
But exactly what does the SEC need to function? Daniel Gross made a compelling argument for what it deserves, given that it is one of very few profitable government agencies. He also makes the unsubstantiated claim that the agency could do a good job of full enforcement if it were allowed to keep all of the money it generates. Because we don't have an audit of the agency telling us exactly what kind of budget the agency should have, claims like this aren't very valuable. But given that the SEC will likely face less revenues as IPOs decline, perhaps it should be allowed to operate at a surplus and save for a rainy day.
I want to see Democrat jumping all over this one...where's your post?
Steven I. Weiss 8:55:00 AM
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