SEC Chairman Mary Schapiro testified before a House Subcommittee, bearing a cup in one hand and a consultant's report in another, as she pleaded the SEC's case for more funds in 2012.  Faced with threats of budget cuts by Republican lawmakers, Ms. Schapiro said that the SEC would need $123 million - above and beyond its regular 2012 operating budget - to enact the rules mandated by the Dodd-Frank Reform Act. 

The SEC now oversees some 12,000 investment advisers and 5,000 broker-dealers, including Wall Street’s top investment banks.  Yet, its budget remains frozen at $1.1 billion.  It also had been frozen between 2005 to 2007, a period when SEC staffing levels fell 10% - its roster only recently returned to its 2005 level.

    Budget Proposals:  Obama Administration vs. Republican Lawmakers.   The President wants to raise the SEC's budget by $264mn to $1.4bn for 2012.  The Republican-led House thinks otherwise, and passed a spending measure in February that would cut the agency’s budget by $25mn.

The administration’s proposed funding increase would allow the SEC to hire 780 people, 60% of whom would be assigned to Dodd-Frank mandates.  For hedge funds, Ms. Schapiro said the agency needs over 100 new staff members.

Even the current year's budget is "severely restraining" the SEC from hiring staff members - including those who would fill vacant positions.  The SEC also has delayed proposing aspects of the Dodd-Frank law, including creation of a credit rating agency oversight office.

This was a big day for defending the SEC’s budget, and Ms. Schapiro was accompanied by several top SEC officials, including Enforcement Chief Robert Khuzami.    [NYT Dealbook, 3/10]

For further details, go to:  [SEC PR 11-65, 3/10] and [Independent Consultant's Report]