Percent Change SEC Staff Workload: 1991 – 2000
Chart sourced via GAO analysis of SEC data
If you can’t stop the legislation, you can defund it.
That is what our Chart of the Day shows, the net impact of defunding regulation. As we previously discussed 1 year ago (SEC: Defective by Design?), there has been a concerted effort at keeping regulators under-funded. The SEC has lacked sufficient staff, thus holding enforcement efforts to a minimum.
This is not an accident. Imagine being allowed to have an army and guns, but no bullets are allowed. The banks and big Wall Street firms are very comfortable with this arrangement. And as Matt Taibbi made clear (Why Isn’t Wall Street in Jail?) , the revolving door between the SEC and Wall Street has prevented any criminal prosecutions
And its not a bi-partisan issue this go around, its the crazy wing of the Republican Party:
“Congressional Republicans intent on big spending cuts are on a collision course with Wall Street’s top regulators over a plan to slash millions from agency budgets.
Lawmakers are targeting the Commodity Futures Trading Commission and the Securities and Exchange Commission. The work of both agencies is set to balloon as the Dodd-Frank financial reform law is implemented. . . .
The most recent comprehensive spending bill produced by House Republicans would chop the CFTC’s funding by $56.8 million — almost a third of the agency’s entire budget — over the next seven months. Funding at the SEC would be cut by $25 million over the same time period.”
To give you an idea of what this looks like, consider the chart above — it shows how the SEC caseload has risen, while its budget remains flat.
Chew on this: Derivatives have been radically deregulated for a decade, thanks to the misnamed Commodity Futures Modernization Act. Now imagine the entity charged with RE-regulating them, the Commodity Futures Trading Commission, has insufficient funds.
The end result of this? An increasing possibility of yet another crisis, one where traders know Uncles Sam & Ben will bail them out.
Gee, I wonder how that will play out? Guess we are gonna find out eventually . . .
SEC: Defective by Design? (March 2010)
Defanging the Regulators (November 2010)
Regulators: Wall Street reform at risk
CNN/Money, March 1, 2011