House Republicans Fire Back At What They See As An Out-Of-Control SEC

Thursday, March 17, 2011 21:34
House Republicans Fire Back At What They See As An Out-Of-Control SEC

Tags: Congress | sec

If the SEC needs $1.5 billion to pursue an expanded mandate, Mary Schapiro's Congressional opponents are now suggesting that maybe that mandate simply needs to stop expanding.

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Scott Garrett, Republican from New Jersey and chairman of the House Capital Markets Subcommittee, is leading the way in asking whether at least part of the SEC's budget constraints are self-created due to its efforts to extend its attention to areas of the markets where neither history nor Dodd-Frank demand it.


Garrett made waves for Mary Schapiro last week by arguing that the SEC budget has tripled over the last 12 years and so keeping its federal appropriation relatively flat is not exactly "starving" the commission.


He also warned that rather than simply spending money to create a unified fiduciary standard for advisors and brokers, for example -- a task not expressly mandated by Dodd-Frank -- the SEC might be better served doing hard cost analysis of how proposed rules would justify the expense of enforcing them.


Given the fact that the SEC traditionally draws much of its operational funds from fines, this kind of "return on investment" approach has a certain logic, but needless to say, even hinting that a universal fiduciary code would be unnecessary is still going to make Garrett a lot of friends -- and enemies -- in the industry.



Comments (1)

This is libertarian ideology (and/or Wall Street servitude) masquerading as responsible governance. If we continue to elect politicians and hire government managers who believe that government can't work, then we'll continue to get a government that doesn't work well.

Even the Gipper said "for SOME of our problems, government is the problem". The more recent crop of conservative politicians are caricatures who have distorted this into "ALL of our problems".

What libertarians can't seem, or don't want to understand is that while some parts of our society are best served with a profit motive, there are many parts where profit is a terrible yardstick. Roads, education, military, police, prisons, earthquake monitoring, volcano monitoring, postal service (I wonder what FedEx would charge for getting a letter to the libertarian boondocks of Montana) and regulation of key economic and environmental areas are just a few. And government should be expected to be the right solution for most of those, and we should elect and hire people who believe it can be done well.

The big conflicted banks didn't almost destroy the financial system because regulations were too onerous, in fact some of the leaders of the big banks actually wanted more regulation to control the competitive forces that were leading them down the path to self destruction.

The SEC's budget growth rate over the last twelve years is dwarfed by the growth of Wall Street (and complex products) over the last twelve years. Of course we could reduce the need for financial regulation if we simply outlawed some of the most conflicted business structures (or should I say re-outlawed them).
bramsay , March 18, 2011

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