And I would have liked to see some context on this reporting:
Some Republicans argue that the regulators’ cries of poverty are overblown. The S.E.C.’s budget this year is $1.18 billion, up 6 percent over 2010 — and nearly triple what it was a decade ago.
The Times should have given us a sentence or two on why the SEC is still struggling despite the big budget increases of the last ten years. Presumably, it’s mostly because its mandates have increased.
But this is good reporting on a serious problem.
You have to bet those besuited regulators on the Megabus sit there daydreaming about the revolving door for much of their four-hour ride. This one anecdote tells you all you need to know about the disparity of resources between Wall Street and the government types trying to regulate it.
Great piece, @Ryan. Thanks for the catch.
You quoted:
Some Republicans argue that the regulators’ cries of poverty are overblown. The S.E.C.’s budget this year is $1.18 billion, up 6 percent over 2010 — and nearly triple what it was a decade ago.
and then you added:
The Times should have given us a sentence or two on why the SEC is still struggling despite the big budget increases of the last ten years. Presumably, it’s mostly because its mandates have increased.
This increase, let's be clear, was under Christopher Cox, a bush appointee, who has been shown to be profoundly incompetent, and hostile to the very mission of the SEC.
But seriously, what the hell is the SEC doing with more than one billion dollars that they can't hire some clerical staff and buy office supplies? I don't really buy your hypothesis that its "mandates have increased." What does that actually mean? Seriously, what the hell are they (the SEC) doing with their money? It's not a good use of time for these lawyers to be performing the function of clerical staff. That's just incompetent management, full stop.
And I'm not sold on the SEC being "self-funded." With this kind of mismanagement, isn't that inviting a situation like the MMS, where the government staff finds itself in bed (literally!) with the people they oversee? This is what happened with S&P and the ratings organizations, which are, admittedly, not part of the government. But the danger is still there. There has got to be a better way.
#1 Posted by James, CJR on Wed 4 May 2011 at 01:40 PM
"Self-funding"? Isn't that kind of like having the credit agencies funded by, oh, I don't know, the people whose financial products they're rating?
#2 Posted by Richard, CJR on Wed 4 May 2011 at 05:33 PM
James, Richard--I don't see why self-funding has to be like the MMS, much less S&P. The problem with self-funding mechanisms like those used by OTS was that banks were able to shop regulators. That meant if a regulator wanted to keep or increase its budget it was incented to become the nicest regulator in town.
It seems to me that the SEC and CFTC would have no such problem. I'm unclear on why they would need to get into bed with those they regulate if they have the independent power to tax them to cover their budget.
#3 Posted by Ryan Chittum, CJR on Wed 4 May 2011 at 07:31 PM
My concern is that they would be under even less scrutiny and Congressional oversight than they already are if they were self-funded. The SEC in particular is already profoundly corrupt such that they are unable to carry out their mission.
Again, what are they doing with this billion dollar budget if they are too incompetent to hire clerical staff? And if a billion dollars isn't enough to run the agency, maybe they need to start imposing fines that actually serve as deterrence to bad behavior. Maybe they need to replace the management with more competent and honest people who are motivated to carry out the mission of the agency.
It's not clear to me why changing into a self-funding agency is going to solve these kinds of systemic problems.
#4 Posted by James, CJR on Wed 4 May 2011 at 08:37 PM
You'll get no arguments from me on that, James. I've long thought they should blow the whole thing up and start again.
#5 Posted by Ryan Chittum, CJR on Wed 4 May 2011 at 11:21 PM
We are agreed, then. Denote the moment!
#6 Posted by James, CJR on Wed 4 May 2011 at 11:33 PM
Come now, Ryan... What mandates have been "presumably" increased in the last ten years that require more than a tripling of the SEC's budget? Huh?
This is the same agency that had proof positive that Bernie Madoff was crooked during the Clinton administration and all through the Bush administration... And did nothing..
And we're actually wondering why these functionaries can't manage to negotiate a field trip to NYC?
Seriously?
The real question here is "why in the hell are SEC regulators spending our money to take a 'tour' of the trading floor"?
Let me tell you what was in the luggage compartment of that Megabus...
Knicks tickets... Saks bags... Corvoisier... Lubriderms... Etc.. Etc...
#7 Posted by padikiller, CJR on Thu 5 May 2011 at 07:45 AM
And another thing, while we're talking about money-sucking government boondoggles...
Had these SEC regulators chosen to ride Amtrak instead of the Megabus to their Manhattan "tour", and had they chosen to ride Acela (the shining star of American high-speed, business class rail service) they would have been riding on a train that has been late more than 20% of the time over the last 12 months....
I bet the Megabus does better than that...
#8 Posted by padikiller, CJR on Thu 5 May 2011 at 07:57 AM