This is all part and parcel of the Republican plan to undo financial regulatory reform by simply starving the regulators, preventing them from implementing or enforcing the Dodd-Frank law. And Republicans on the House Financial Services Committee are digging in their heels:
Rep. Scott Garrett (R-N.J.) told The Hill in an exclusive interview that it is “troubling” that financial regulators want to be given more funds and staff after failing to prevent the worst financial crisis since the Great Depression. “It’s only in government, especially in Washington, where you have agencies that failed in their core assignments in the past, and yet they are rewarded with more authority and bigger budgets,” Garrett said during an interview Thursday.
So the Republicans (and not a few Democrats) spent years pulling the threads out of the regulatory framework and appointing regulators who actively ignored their agencies’ missions, and now that a new law is in place to resurrect common-sense safeguards and rules, the GOP says it won’t fund that effort, because the regulators failed last time. It’s a classic case of blaming the government for being ineffective after implementing policies rendering government effectiveness impossible.
Yesterday, Rep. Maxine Waters (D-CA) laid out in stark terms how truly overwhelmed the SEC currently is:
From 2005 to 2007 (during the build up 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 50 percent. Let’s put these numbers into perspective. The SEC’s 3,800 employees currently oversee approximately 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.
As Rep. Barney Frank (D-MA) said yesterday, the funding levels that Republicans want for the regulatory agencies “predate financial regulation, predate regulation of derivatives, and predate investor protection.” Indeed, a 21st-century financial system requires a 21st-century regulatory framework, and the Republican push to starve regulatory agencies of the money they need to operate is simply deregulation by another name.