Tags: SEC | White | FSOC | rate

SEC Chair White Defends SEC Budget in House Financial Services Committee

By    |   Wednesday, 25 Mar 2015 08:08 AM

On March 24, Mary Jo White, chairman of the Securities and Exchange Commission (SEC), testified before the House Financial Services Committee, chaired by Rep. Jeb Hensarling, R-Texas, at a hearing titled "Examining the SEC's Agenda, Operations and FY 2016 Budget Request."

On the surface this is a routine hearing, because although the budget of the SEC is funded by fees and not by the government, its budget is subject to the authorization and appropriation process.

In opening statements, Hensarling and Ranking Member Rep. Maxine Waters, D-Calif., predictably clashed over the merits of the SEC's budget request. Hensarling complained that the SEC's budget has increased by 35 percent since the Dodd-Frank Act became law in 2010, nearly 400 percent since 2000 and three times the rate of the defense budget, whereas Waters insisted that the growth in the agency's responsibilities since the 2008 financial crisis episode justifies the increase.

However, what made the hearing compelling was that members took advantage of it to ask any questions they might have about the SEC's activities, and on this occasion they spent three and a half hours doing just that.

The dominant theme, especially of Republicans, was that the regulatory programs of the SEC and of the Financial Stability Oversight Council (FSOC) threaten the ability of the economy to grow and of Americans to save and invest. In this writer's opinion, this line of attack reflects the strategy of the industry to present itself as the victim of the ongoing, permanent financial crisis. Here are three examples:
  • Fiduciary Duty Standard. The administration has proposed to create a single standard of liability through the Department of Labor (DOL) to cover both broker-dealers and investment advisers. Currently broker-dealers are required to act in the best interest of the customer, whereas investment advisers are subject to a more lenient standard that their products must be suitable for the investor. The industry has importuned the SEC to propose a friendlier regulation than the one expected to be proposed for the second time by DOL. The industry contends that the DOL proposal could raise costs and hamper the ability of investors to avail themselves of vehicles for pensions and 401(k) plans.
  • Regulation of Asset Managers. The FSOC has designated one asset manager as subject to regulation by the Federal Reserve and might designate others in the future. The industry protests that this is unwarranted and will again raise costs and limit choices for investors.
  • Volcker Rule. The industry contends that restrictions on the ability of banks to engage in proprietary trading are causing a dramatic drop in the inventories held by dealers.
On the first two issues, White has taken tentative steps to support the industry positions over those of the DOL and FSOC, respectively. On the Volcker rule, White told the committee that it is too early to tell what is causing the drop in liquidity, but the staff is watching this, especially to gauge the market's response to the expected increase in interest rates by the Federal Reserve.

(Archived video, White's statement and the staff memorandum can be found here.)

© 2017 Newsmax Finance. All rights reserved.

 
1Like our page
2Share
Robert-Feinberg
On March 24, Mary Jo White, chairman of the Securities and Exchange Commission (SEC), testified before the House Financial Services Committee, chaired by Rep. Jeb Hensarling, R-Texas, at a hearing titled "Examining the SEC's Agenda, Operations and FY 2016 Budget Request."
SEC, White, FSOC, rate
514
2015-08-25
Wednesday, 25 Mar 2015 08:08 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved