‘Self Funding’ the SEC

Wall Street’s chief cop has done an awful job policing its charges. This was due to a combination of incompetence, structural deficiencies and malignant (not benign) Congressional neglect.

Ann Woolner has a fascinating, counter-intuitive idea to reform the SEC. Give the agency more to do and freer rein. Oh, and let it fund itself.

“The Senate version of the optimistically named Restoring American Financial Stability Act would let the agency fund itself with the fees it collects from registrations and transactions. It’s an idea that SEC Chairman Mary Schapiro advocates and Senator Charles Schumer, a New York Democrat, has pushed.

The downside is that it would remove leverage that Congress and the president have over the SEC by keeping them away from the agency’s purse strings. As with the Federal Reserve, SEC budgets would still be submitted to Congress, but lawmakers couldn’t cut them.

If the agency is ever going to have the resources to catch up with the growing size and evolving sophistication of the financial markets, it has to have more money and a way to protect itself from the ever-swinging political pendulum.”

I like the idea. I also like the idea of paying SEC staff bonuses based on the fraud they uncover, monies recovered for investors, and fines. But there needs to be a balance so that investigators aren’t only pursuing the home run cases.

There would also need to be some sort of mechanism to counter-balance the SEC if it ever became a runaway freight train of unjust fines — but we can cross that bridge when we get to it.


SEC: Defective by Design? (March 18th, 2010)

SEC: Regulatory Capture Hard at Work (March 18th, 2010)

Go Fund Yourself, Congress Ought to Tell the SEC
Ann Woolner
Bloomberg June 16 2010   

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