Washington – Congresswoman Maxine Waters (D-Calif.), Ranking Member of the Financial Services Capital Markets Subcommittee, delivered the following remarks at a press conference today on funding for the SEC, which under the Republican budget plan would revert to FY 2008 levels. Congresswoman Waters was joined by Rep. Barney Frank (D-Mass.), the Financial Services Committee’s Ranking Member, and Rep. Carolyn Maloney (D-N.Y.), the Ranking Member of the Financial Services Financial Institutions Subcommittee:
“Thank you, Rep. Frank for inviting me here today to speak on the need for adequate funding levels for the Securities and Exchange Commission (SEC). Like you and Rep. Maloney, I am very concerned about the impact of the Republican resolution to freeze non-military discretionary spending at Fiscal Year 2008 levels. This funding freeze will have negative consequences for a variety of agencies—including those that provide much needed social services at a time when unemployment is at 9.4 percent. However, it will also negatively impact those agencies that are charged with policing our financial markets like the SEC.
“It’s interesting that the Republicans have chosen 2008 as the year on which to base their funding cut. It’s interesting because that was the year in which our financial markets collapsed. It was also about that time when we realized that the resources we had provided to the regulators of those markets had been sadly lacking. This was especially the case at the SEC. For example, from 2005 to 2007 (during the build up to the crisis that imploded in 2008), the SEC lost 10 percent of its staff. In addition, from 2005 to 2009 the SEC’s investments in information technology declined 50 percent.
“Let’s put these numbers into perspective. The SEC’s 3,800 employees currently oversee approximately 35,000 entities—including 11,450 investment advisers, 7,600 mutual funds, 5,000 broker-dealers, and more than 10,000 public companies. Furthermore, these staff police companies that trade on average 8.5 billion shares in the listed equity markets alone every day.
“The Dodd-Frank Act will prevent the next crisis by authorizing the SEC to regulate derivatives and credit ratings agencies and provide oversight of investment advisors and broker-dealers. In order to do this, the SEC needs additional funding. Unfortunately, House Republicans don’t want the SEC to staff up or to even maintain their current staffing levels. If funded at FY 2008 levels, the SEC would have to lay off hundreds of staff and cut its IT budget down to $86 million, a level that would not allow it to implement the new systems it needs to protect the nation’s securities markets.
“I understand that Republicans are concerned about spending. Democrats are concerned about the deficit too. However, when we have resolutions like the one we are voting on today that blindly take an axe to the budget instead of a scalpel, we are placing our security—the security of our financial markets in this case—at risk.”