To damn with faint raise...

The White House's new budget allots a 12% increase for the SEC.  The modest raise prompted the following lukewarm reception from the Commission chair:

"If enacted, the President's request will do a great deal to help us keep pace with the continuing growth of the markets and provide necessary resources to support important regulatory initiatives in 2011."

One doesn't have to parse the SEC spreadsheet to discern that the official statement translates to "Thanks.  If it actually happens, the raise may help us - along with other resources - to start to consider possible unspecified changes next year.  Or not."

But one certainly cannot blame the Commission for the lackluster gratitude.  In the recent past, even more generous (and more realistic) budget increases have mysteriously shrunk between press release and final appropriation.  Further, while a 12% hike does more than triple the annual budget increases of the Bush years, it hardly permits the type of expanded jurisdiction the public, press, and some pending Congressional Bills have called for (e.g., adding thousands of hedge funds to the examination schedule).   Finally, it seems safe to conclude that the SEC's calls since late 2008 for self-funding have resolutely failed.

Which perhaps underscores the real message behind the budget raise:  The White House could go either way when it comes to the SEC.  The Obama Administration's Regulatory Reform plan of June 2009 both praised the Commission for certain of its regulatory efforts and criticized its consolidated entity supervision.  Concurrently, the plan suggested continued Commission efforts at outlining rating agency duties but a diminished role in overseeing the net capital of the largest firms.

The choice seems to be simple.  If the plan is to keep the SEC as chief securities regulator while augmenting its duties, then significantly increase its coffers.  Otherwise, we may see more of what confounds us most about funding for the 76-year old agency - it allows staffers to do some things very well, others not so much, and some things not yet at all.          

---JSC, 2/2/10