Senator Schumer took a brief break this week from his tireless advocacy on the all-important carry-on bag issue to call for the Securities and Exchange Commission to "fund itself by retaining the fees it collects" rather than relying on Congressional appropriations.
The Schumer press release refers to "the SEC's chronic under-funding" and says, "Currently, the SEC raises millions more dollars every year in registration and transaction fees than it is allocated through the appropriations process, but its budget is limited to the amount approved by Congress. From 2005 through 2009, the SEC collected approximately $7.4 billion in transaction and registration fees but Congress only gave it only around $4.5 billion."
This is a really bad idea. If Mr. Schumer thinks the SEC should get more funding, his party controls the House, Senate, and White House, and nothing is stopping him and his colleagues from increasing the agency's funding through the appropriations process in the Constitution. That constitutional process provides checks, balances, oversight, and accountability. None of that is present in a self-funded agency.
Mr. Schumer's press release, while complaining about the SEC's "chronic under-funding," fails to note that the SEC's budget actually more than doubled from 2000 to 2008, going to $905 million from $370 million. In the private sector, if you fail, you go out of business. In the government, if you fail, your budget gets increased.
The final irony comes from the crowd that Mr. Schumer assembled to back his plan for a self-funded, expanded SEC: "five former SEC chairmen have endorsed the reform, including four who served during Republican administrations: David Ruder (who served from 1987-1989), Richard Breeden (1989-1993), Arthur Levitt (1993-2001), Harvey Pitt (2001-2003), and William Donaldson (2003-2005)."
Mr. Levitt is a paid adviser to Goldman Sachs, which just had $12 billion of its market capitalization destroyed by the SEC. Mr. Breeden is a money manager who recently took a hit from the Wall Street Journal over his money-losing investment in Zale, and who Mark Steyn memorably called "on course to become the first corporate governance billionaire."