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US Senate's Financial-Overhaul Bill Allows SEC To Fund Itself

By Fawn Johnson, Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- A provision allowing the Securities and Exchange Commission to fund itself based on the fees it collects will be part of a broad financial regulatory overhaul bill to be unveiled this week by Senate Banking Committee Chairman Chris Dodd (D., Conn.), according to people familiar with the issue.

Dodd's bill is expected to mark the Senate's starting point for negotiations with the House and the administration on how to rework financial oversight in the wake of the market trauma of recent years.

Sen. Charles Schumer (D., N.Y.) has championed the notion that the SEC retain the fees it collects from financial institutions, saying the self-funding provision would boost the agency's resources.

The SEC now relies on the cumbersome congressional appropriations process for its annual funds. In some years, the agency has taken in almost twice the regulatory fees as Congress has provided it in funding.

Schumer notes that the SEC's budget has remained essentially flat in recent years, while the complexity and size of financial markets continue to grow.

SEC Chairman Mary Schapiro last week asked Congress for the right to retain its regulatory fees, saying that funding mechanism would help the agency hire the experts it needs to deal with emerging market trends.

Schapiro is trying to get the SEC out from under the criticism it has faced for its years-long failure to detect wrongdoing of the convicted Ponzi-scheme operator, Bernard Madoff.

From Schumer's perspective, addressing the "SEC's chronic underfunding" could help it attract and retain experienced personnel who could uncover that kind of wrongdoing.

Other independent agencies, such as the Federal Reserve and the Federal Deposit Insurance Corp., fund themselves from fees collected from the industries they oversee.

Critics of giving the SEC the same authority are likely to say that it could cause the agency to go unmonitored.

-By Fawn Johnson, Dow Jones Newswires; 202-862-9263; fawn.johnson@dowjones.com

  (END) Dow Jones Newswires
  11-09-091404ET
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