U.S. House Republicans push against SEC budget boost. What does the SEC have to do to get its budget increased?  Well, according to 2 key House Republican leaders, it simply needs to dedicate its existing resources to reforming its internal operations.

"The SEC has not undertaken a serious, objective self- examination of the way it does its job. Some will suggest the solution to this ... is more funding.  That is one position I would vehemently disagree with at this point." -- Scott Garrett, Republican Chair of the House Financial Services - Capital Markets subcommittee.

Meanwhile, the SEC's fiscal needs don't seem all that important, given the fact that Democrats and Republicans are stalemated over taxes and spending - which jeopardizes the government's ability to operate beyond Friday. Budget Numbers on the Table. Outwardly, the Democrats and the Republicans have said what they're willing to allocate to the SEC for 2012.  Democratic lawmakers in the Senate are seeking $1.407 billion for the SEC's 2012 budget;  Republican House members say they'd like to keep the SEC's budget unchanged at $1.185 billion.  The difference comes to $222 million.

[C-I Note:  It's interesting that the difference seems relatively small.  But given current realities of regulatory disciplinary actions, where few are surprised to see individual SEC cases readily and regularly settled for hundreds of millions, one's tempted to refer to $222mn as being "chump change."]

Yet, it's not just a matter of "dollars and cents." According to Congresswoman Jo Ann Emerson, who chairds the appropriations subcommittee that wields significant power over the SEC's budget, an agreement for the SEC budget had been reached.  She's not saying what the number is, and instead echoes Mr. Garrett's sentiment that reform at the SEC must come first.  She says, "I think they have to prove that they can reform before they get any more money." Despite all their bluster, it's hard to criticize the position of Republican Congressional leaders.  They're still venting frustration over glaring deficiencies at the SEC - namely, provisions in the Dodd-Frank law, the SEC's past missteps with providing economic analyses of its rules, and the SEC's "never-to-be-forgiven-failure" to detect Bernard Madoff's massive Ponzi scheme. Reforms Recommended for the SEC. Some of the kinds reforms that Republicans would like to see implemented at the SEC were outlined in a new report at the U.S. Chamber on Wednesday.  That report, drafted by former SEC Secretary Jonathan Katz, calls for a major overhaul of the SEC's structure, rule-making process and enforcement procedures, including the following:

• To ease the SEC Chairman's overloaded managerial responsibilities, select one of the 4 Commissioners to be a Deputy Chairman in charge of management and operations.

• Expand the number of commissioners from 5 to 7 (including the Chair), and diversify the skillset of commissioners to include accountants and economists.

• Improve the SEC's cost-benefit analysis process when introducing rules - something that has dogged the SEC over the years.  Most recently, in July, a federal appeals court tossed out a rule that gave shareholders more power to nominate directors to corporate boards after judges said the agency did not properly weigh the rule's economic impacts.
  • Under Katz's plan, the SEC should start cost-benefit analyses earlier in the process and let those findings drive policy-making. He also calls for an economic look-back after a rule is implemented to ensure it has the desired effect.

• Increase the number of economists on staff.

While the SEC has responded to Republican concerns, those efforts seem to have little impact - and it's likely they will have little impact in the future. Chairman Schapiro, can you spell, "SEC Reform?" [Reuters, 12/14/11]