New York Senator Charles Schumer, Democrat, released a statement on Thursday listing his intent to push a proposal that would change the Securities and Exchange Commission’s method of funding, providing the agency access to millions more in funds. The move is sparked by a report that listed the SEC staff’s lack of experience as the cause for missing the Madoff Ponzi scheme.
The report released yesterday by Inspector General David Kotz also blamed a widespread incompetence at the SEC as a main reason for missed red flags. Schumer is drafting legislation that would allow the agency to keep all of the fees it collects, which would provide well needed funds to recruit higher level talent and provide stronger training for existing staff.
Schumer plans to introduce the proposal to Congress when it returns from break next week. The proposal aims to have the SEC’s funding structure similar to that of the Federal Deposit Insurance Corporation and the Federal Reserve. Those two agencies are allowed to retain all of the revenue taken in from fees and the like.
According to estimates by Schumer, if the proposed changes were in effect for 2007 the SEC would have $650 million in addition to its $880 million budget from that year, generated from collected revenues.
The current budget proposal for the agency for the new fiscal year, which starts Oct. 1, is just over $1 billion. If approved, that would be the first time the SEC has a budget of $1 billion; last year’s budget was $960 million. The latest proposal has been passed by the House of Representatives, but still needs to get through the Senate.
The SEC funding proposal is the second piece of legislation by Schumer related to the agency. In the spring, Schumer and Alabama Senator Richard Shelby, Republican, who is a senior member of the Banking Committee, established legislation that will enable the SEC to hire 100 new investigators and attorneys by providing $10 million in funds over the next two years.
