Budget impasse adversely affecting SEC, chief says

The budgets of the main Dodd-Frank implementers, the SEC and Commodity Futures Trading Commission are still at pre-financial overhaul levels, thanks to a continuing budget resolution passed by Congress in December.

“Unfortunately, we’ve been operating under a continuing resolution that has hampered our ability to do what investors and capital markets deserve,” Schapiro said in a speech at the Practising Law Institute.

The SEC had asked Congress for $140 million more in fiscal 2011, as Schapiro had previously said the SEC will need to hire 800 more employees to handle the Dodd-Frank workload.

But Republicans, enjoying new influence in the House since assuming the majority, have indicated they are not interested to handing over more money to the financial watchdog. The push to fulfill campaign promises to cut spending, coupled with opposition to the Wall Street reform law and critiques of the SEC’s previous failings to catch financial wrongdoing are making for a tight grip from conservatives on the federal pocketbook.

Schapiro pointed out in her speech that the SEC has served as a net plus for the government, as last year it sent the Treasury Department $300 million more in collected fees than it spent.

The budget shortfall is preventing the agency from bringing on talented employees and adopting technology that keeps up with high-tech Wall Street traders, she said.

“We need to ask ourselves if we want our market analysts to continue to use decades-old technology to recreate market events or to monitor trading that occurs at the speed of light,” she said. “We need to ask ourselves if we want to turn away the influx of market and economic experts willing to complement our existing talent and join our ranks.”