Mary Schapiro Gears Up For 2012 SEC Budget Fight, Clarifies Goals Hot

Schapiro tells Congress she'd like another $222 million next year, which would bring the SEC's total budget to $1.4 billion.

She wants $78 million for cutting-edge forensic computers and to update EDGAR. The rest would go toward staffing up to satisfy Dodd-Frank as well as better achieving the SEC's traditional goals.

Some of the choices seem esoteric -- is the world of money market funds really so confusing that the SEC needs 15 more people to watch it better? -- but others are revelatory.

Schapiro wants to hire 43 people just to follow up on whistleblower reports, the kind of thing that could have helped the commission catch Bernie Madoff and other big abusers of the system back when the SEC's budget was frozen and it was hemorrhaging staff.

Even mentioning a staff number that big indicates that an enormous number of whistleblowers are out there filing complaints. Sure, not all of them will be on the mark, but that's still a lot of smoke for no fire.

One other element to watch. As Schapiro points out, 2012 is the first year that Dodd-Frank makes the commission completely deficit-neutral by matching the transaction fees it collects to its budget, rather than the other way around.

This means that whatever Congress dictates the SEC can spend, fees will rise or fall to match.

In theory, this would allow the commission's enemies to become very popular with the industry's biggest players because starving the SEC would keep transaction fees low.

Adding $222 million to the budget, for example, would force trading firms to pay an extra 0.4 of a cent on every $1,000 of turnover they create.

This may not be exciting for smaller firms, but $4 million in extra fees on every $1 billion is definitely real money for the giant banks. 

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