Directing Committees To Review Regulations From Federal Agencies

Floor Speech

Ms. WATERS. I yield myself such time as I may consume.

Mr. Speaker, as ranking member of the Subcommittee on Capital Markets and Government Sponsored Enterprises, I am extremely concerned about the impact of the Republicans' continuing resolution on the ability of the Securities and Exchange Commission, the SEC, to police our capital markets, thereby preventing another financial crisis.

To be clear, the Republican continuing resolution, with its $100 billion in proposed cuts, is an assault on job creation, vulnerable populations and our communities. However, it is also an assault on our financial markets. If the Securities and Exchange Commission is level-funded or funded at 2008 levels, we risk defunding the main agency with oversight over the risky financial products that started the 2008 financial crisis. The SEC is supposed to be our Wall Street cop. It is supposed to make sure that the brokerage firms are obeying the law. It is supposed to protect the investors. It is supposed to make sure that those people who work every day having their money invested by institutional investments like the pension funds are not losing their investments in their 401(k)s.

Let's talk about what happened in 2008. In 2008, our financial markets collapsed. In 2008, it was clear that the SEC didn't have the tools or the resources it needed to monitor or police those markets. So, frankly, I don't understand why Republicans would want to underfund the SEC with the same amount of funding it received in the year that it lacked the resources to monitor financial markets that were spinning out of control.

From 2005 to 2007, during the buildup to the crisis that imploded in 2008, the SEC lost 10 percent of its staff. In addition, from 2005 to 2009, the SEC's investments in information technology declined by 50 percent. During this time period, trading volume doubled, the number of investment advisers has increased by 50 percent, and the funds they manage have increased 55 percent to $33 trillion.

Let's put these numbers into perspective. The SEC's 3,800 employees currently oversee 35,000 entities--including 11,450 investment advisers, 7,600 mutual funds, 5,000 broker dealers, and more than 10,000 public companies. Furthermore, these staff police companies that trade on average 8.5 billion shares in the listed equity markets alone every day.

The Dodd-Frank Act will prevent the next crisis by authorizing the SEC to regulate derivatives, provide oversight of investment advisers and broker dealers, and rein in credit rating agencies. In order to do this, the SEC needs additional funding. The Securities and Exchange Commission that is our Wall Street cop to protect us all needs additional funding. Unfortunately, House Republicans don't want the SEC to staff up or to even maintain their current staffing levels. Why? If funded at fiscal year 2008 levels, the SEC would have to lay off hundreds of staff and cut its IT budget down to $86 million, its lowest level of IT spending since 2003.

At this level, the SEC would not be able to implement the new systems it needs to protect the Nation's securities markets.

We have all said to the public in so many ways, and certainly through Dodd-Frank, that we are going to change the way the SEC has been working; we are going to make sure we have some protections for consumers and investors. Yet we know it can't be done without the resources, without the money. You can tell where your priorities are based on where you put your funding. This attack on the SEC is more disturbing because the agency's funding will be deficit-neutral. Beginning in fiscal year 2012, fees collected by the SEC will match its congressional appropriation. The critical role that the SEC plays in our Nation's financial markets is precisely why Wall Street, the very entity that the SEC regulates, is asking for Congress to fully fund this agency.

According to a February 7 article in The New York Times, 41 prominent securities lawyers and professionals have already written to Congress to ask for full funding for the agency. Why do we have to beg for funding for the SEC if we are truly about the business of protecting our consumers?

Mr. Speaker, the SEC needs a sufficient level of funding. If Wall Street's cop on the beat is unavailable, we risk another financial crisis and loss of more jobs.

I reserve the balance of my time.

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