Unfunded mandates

At the top of her radio show yesterday, Diane Rehm asked departing SEC Chair Mary Schapiro to name the one authority she would wish for the SEC, that the agency does not currently have.

Schapiro responded:

"You know, this might sound a little bit mundane to many of your listeners, but actually, it would be for the SEC to have something called self-funding, which would allow us to adjust our budget to the needs of the regulatory climate. The bank regulators all have that. The FDIC -- and I know Sheila Bair has been on your show many times -- can set their budget to respond to external events. The SEC and the CFTC are the only two financial regulators who can't do that."

It was a parting question. Schapiro left the line, and Rehm and her panelists for the hour went on to talk mostly about the agency's record of enforcement leading up to and following the financial crisis.

Balls in the airMaking the point that the SEC is woefully understaffed, one of the panelists, Bartlett Naylor of Public Citizen, compared the 4200 headcount for the agency with the 35,000 headcount for the New York City Police Department. "We're not even in the ballpark of what's necessary," he said.

The show touched on how the agency is behind on rulemaking under Dodd-Frank, but (unless I missed it) didn't reach into the rulemaking topics under the JOBS Act that are current obsessions of this blog: implementation of the lifting of the ban on general solicitation in Rule 506 offerings; and rules for equity crowdfunding.

I think those of us keyed on the changes promised by the JOBS Act, frustrated by the slow pace of the agency, can lose sight of what an enormous mandate the SEC has. And I'm ruing, again, how everyone looked the gift general solicitation horse in the mouth. If only in terms of timing, surely it would have been better to have thanked the Commission for the proposed rules and urged prompt adoption, rather than asking the staff to go back to the drawing board.

Photo: Ian Parkes / Flickr.


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