SEC Bracing To Lose Funds, Scaling Back Investigations

UPDATE: Reuters reports that U.S. financial regulators could be getting some budget soon under a spending bill released on Tuesday. Here's Reuters:

The Commodity Futures Trading Commission would get a budget increase of 69 percent, while the Securities and Exchange Commission would get an increase of 18 percent under the bill, according to a summary posted on the website of the subcommittee that funds both agencies.

As lawmakers in Washington attempt to slash the budget, Wall Street regulation could be on the chopping block.

The Securities and Exchange commission has already scaled back its investigations of potential wrongdoing, anticipating that it may lose a portion of its funding when Republicans take over the House of Representatives next year, the Wall Street Journal reports. During this critical time for the SEC, as it helps write the rules for a wave of new financial regulations, and as it tries to determine whether Wall Street firms committed wrongdoing of potentially epic proportions, the agency is paring down.

To achieve its growing list of goals, the SEC had planned to increase its staff by 11 percent next year, counting on a budget increase of 12 percent, proposed by President Obama, the WSJ notes. It's unclear at this point whether that increase will be approved. The agency, worried that the newly Republican House will push for austerity, has already cut back.

"It is not helpful for the wheels of investigations to grind to a halt," former SEC lawyer Jacob Frenkel told the WSJ.

The SEC is currently in the process of fleshing out implications of the Dodd-Frank Act, the landmark financial regulation that passed this summer. Among its other tasks, the SEC has to help determine rules governing executive pay on Wall Street. Pay practices that rewarded short-term risk-taking pushed executives to make bets that hurt their companies' long-term health and contributed to the worst financial crisis since the Great Depression.

In addition, the SEC is investigating whether banks withheld crucial information from investors who bought complicated securities known as CDOs. These securities, based on bundles of subprime and prime mortgages, wreaked carnage among investors and banks, contributing to the financial crisis.

Comments

[longtimegone]

06:48 PM on 12/21/2010

Good time to paint yourselves into a corner, with the WikiLeaks documentation, which will condemn both bank executives and financial regulators, soon to come. Both the SEC and the Republicans will be doing the latest dance craze in politics: "walking back those earlier statements."

[Sundialsvc4]

07:51 PM on 12/16/2010

Mary Schapiro has PLENTY of money from being "The Fixer" for a very long time now.

These agencies do not need more money in order to "do investigations." They are getting paid hundreds of millions of dollars a day ... no, that is not an exaggeration ... NOT to do investigations.

Please, quit looking to the Federal Government to "enforce" the law. That isn't how it works anymore.

You see, the Supreme Court, using powers never granted to it by the US Constitution, has declared that Article 2 Section 4 Word 25 of the US Constitution does not exist. Quite the opposite. Every corporation has a Constitutionally Protected Right to "Bribedom of Speech," and of course, that means that your friendly neighborhood Senator, Congressman, President, Commissioner, and so-forth is Constitutionally Prohibited from refusing to accept that bribe, because that would be abrogating said Corporation's "Constitutional Rights," as defined (un-constitutionally) by the Privy Council of the United States.

Confused yet? Don't be. Just remember the Golden Rule.

You've been reading these paragraphs for, what, a minute now? Well, during that one minute, your friendly neighborhood Government has been offered, and has cheerily accepted, more than $100,000.00 in cash. And they will therefore fight against you ... will fight very, very hard against you ... to ensure that 311 million American citizens DO NOT get what they need, but ... (oops!) "Make that $115,000.000 in cash! Isn't this fun?!"

[GustavoRejivik]

12:16 AM on 12/16/2010

The SEC failed with their current budget, why should we think more bureaucrats and regulation would turn this around?

[PTorbay]

10:30 PM on 12/15/2010

As Congress just grifted the Pentagon $95B a year RAISE for 2011, after Republicans screamed
for a whole year that ObamaCares $95B a year would 'break the Nation', and they grifted it without
ANY DEBATE, and ZERO subsequent news coverage, we're now officially a TRILLION a year MIL,
with a +14% YOY growth, which China or Brazil or India would KI \_ \_ to have that kind of growth.

[rainkitty]

09:05 PM on 12/15/2010

"This was a hostile world takeover orchestrated through economic attacks by a very small group of unelected global bankers. They paralyzed the system, then were given the power to recreate it according to their own desires. No free market, no democracy of any kind. All done in secrecy. In the process, they gave themselves all-time record-breaking bonuses and impoverished tens of millions of people - they have put into motion a system that will inevitably collapse again and utterly destroy the very existence of what is left of an economic middle class. That is not hyperbole. That is what happened.
We are talking about trillions of dollars secretly pumped into global banks, handpicked by a small select group of bankers themselves. All for the benefit of those bankers, and at the expense of everyone else. People can’t even comprehend what that means and the severe consequences that it entails, which we have only just begun to experience.

The American Dream is O-V-E-R. Welcome to the neo-feudal-fascist state."

http://ampedstatus.com/the-wall-street-pentagon-papers-biggest-scam-in-world-history-exposed-are-the-federal-reserves-crimes-too-big-to-comprehend

[PTorbay]

10:55 PM on 12/15/2010

And the best part? 25% of Americans would vote for Sarah Palin for President today, and think
the greatest issue for America is illegal Mexican immigrants vers high number white abortions.
Another 35% work for Mil.Gov, and you can't slide a tissue paper between them and Corporate.
"We won, you lost. It's just business, get over it!" At least we don't have only 24 hours to leave
homes of 2000 years so the victorious Zinoists can steal our land, like we did to First Nations!
Besides, relax, it'll all be over very, very soon. Read the book, 'The Law of Exponential Usury'.

[hellboundtrain]

07:19 PM on 12/15/2010

There'd be plenty of paper for our government to pay for everything with the fines and payback, as well as thousands of lawyers making tons of $, if only they would go after the naked shorters, plus it could probably fill the prisons.

[maxwelldog]

06:08 PM on 12/15/2010

no problem!
JUST GET SOME MORE PAPER AND PRINT IT UP!

Heck, I have a bunch of spare paper upstairs if they want it.
Always willing to do my share to help.

[Paul Sta]

05:57 PM on 12/15/2010

"The Securities and Exchange commission has already scaled back its investigations of potential wrongdoing, anticipating that it may lose a portion of its funding when Republicans take over the House of Representatives next year, the Wall Street Journal reports."

I didn't think it was possible for the SEC to "scale down" or do any less.

Wow. now that banks and Wall Street have destroyed the economy, we're to poor to prosecute them.

[costellowriter]

05:15 PM on 12/15/2010

Yet they still won't charge the big boys on Wall Street with any crime. Just implement more regulations against the little guy.

[BlueSkyPilot]

05:14 PM on 12/15/2010

Just give the regulators them the power to confiscate illegally obtained funds to be used to fund additional regulators and investigations. Kind of like they do with drug profits.

[Longtimeliberal]

06:33 PM on 12/15/2010

Great idea~

[themodernleader]

04:38 PM on 12/15/2010

   If the Republicans cut the spending of the regulators, that action clearly would  indict them of covering up the financial, banking fraudsters.  We must wait to see what they intend to do.  Then we will learn of their honor and fidelity to the Constitution.  Then we will discover if the banking frauc will be uncovered by investigation  or when the entire financial, economic system collapses.  We will be shocked to learn that the banks owe more than they have in assets. 

[costellowriter]

05:16 PM on 12/15/2010

They're all as bad as each other. We need a new system of government.
http://socyberty.com/economics/economy-or-con/

[themodernleader]

06:14 AM on 12/16/2010

  costellowriter.  We do not need a new system of government.  Our constitutional system of government has served and is still serving us well.  The leaders and many of their office holders  in the goverrnment are not serving us well.
    What I hope you meant to write was that our economic system loaded against the many for the few must be replaced.  This replacement can be done within the framework of the Constitution if we have the courage and committment to this end. And the right direction is the same dynamic capitalism existing under FDR and HST and several subsequent presidents.  The hankering for a new Constitution is a call for a new country that  would probably trigger a split up of the present nation into several nations at each other's throats.

[nogimmicks]

02:26 PM on 12/15/2010

What they really need is to be elected rather than being essentially nominated by the bankers to cover up their crimes. Just listen to the exchange between Alan Grayson and a "public servant" inspector General for the Fed bankers, Elizabeth Coleman:

http://www.youtube.com/watch?v=PXlxBeAvsB8

A good start would be to purge the Sec rather than give them more money.

[costellowriter]

05:16 PM on 12/15/2010

I'm all for that.
http://socyberty.com/economics/economy-or-con/

[Progress08]

05:21 PM on 12/15/2010

A senate subcommittee hearing on Friday and golf on Saturday.

[OldTulsan]

01:24 PM on 12/15/2010

William K. Black testifying at the Lehman Brothers collapse hearings, asked why the SEC only had 24 investigators:

http://fdlaction.firedoglake.com/2010/04/20/transcript-video-bill-black-testimony-on-lehman-bankruptcy/
Transcript & Video: Bill Black Testimony on Lehman Bankruptcy | FDL Action

"...The SEC: we’re told they’re only 24 people in their comprehensive program. Who decided how many people there would be in their comprehensive program? Who decided the staffing? The SEC did. To say that we only had 24 people is not to create an excuse — it’s to give an admission of criminal negligence. Except it’s not criminal, because you’re a federal employee.

In the context of the FDIC, Secretary Geithner testified today that this pushed the financial system to the brink of collapse But Chairman Bernanke testified we sent two people to be on site at Lehman. We sent fifty credit people to the largest savings and loan in America. It had 30 billion in assets. We had a whole lot less staff than the Fed does.

We forced out the CEO. We replaced the CEO. .."

[OldTulsan]

01:19 PM on 12/15/2010

Just another case of regulatory capture...

http://academic.cengage.com/resource_uploads/downloads/0324321457_65779.pdf
George J. Stigler

"...Rather than promoting an efficient allocation of resources, regulation tends to
serve the interests of those regulated at the expense of the broader public. Groups
who have intense and focused interest tend to “capture” the regulatory system and
use it for their own self-interest..."

This is becoming obvious in the financial crisis and in the death of 29 miners in West Virginia.

To end regulatory capture, regulators need to be incentivized by a "bounty system" that provides lavish rewards for regulators and whistle blowers.

[Jack Grainger]

12:58 PM on 12/15/2010

In 2004, this senior lost 78k in a pump &dump scheme, the company name was Via-Link the"business" was "supply chain management" The CEO was Louis B. "Bucky" Kilbourne The ticker symbols were Vlnk &IQIQ. Notified the SEC as late as 2006,gave full details and offered to send copies of confirmations, they have done absolutely NOTHING! Bob Green [phone] is the latest SEC "employee" to tell me "He can't do anything" When my country thought it was a good idea to send me off to war at the age of 19 I went, now I need there help to obtain justice and they (SEC) couldn't care less...Disband the SEC they coddle crooks (Bernie M.)and watch porn all day while we pay their salaries.