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Appropriations Panel Advances Budget Bill Cutting SEC Funding

By voice vote, a House Appropriations subcommittee advanced a budget bill that would cut the SEC’s funding and impose new constraints on the commission’s activities. The bill funds the SEC at $1.55 billion for the coming fiscal year, down from the current year total of $1.6 billion.

A House Appropriations subcommittee on May 25, 2016, approved a budget bill that cuts the SEC’s funding and imposes new constraints on the market regulator’s activities.

By a voice vote, the subcommittee on Financial Services and General Government approved the spending measure giving the SEC $1.55 billion in funding for fiscal 2017, which begins in October.

The total represents a rebuke to the White House, which has asked Congress for $1.78 billion to fund the commission in the coming fiscal year. Instead, the SEC will see its funding shrink below the current-year total of $1.6 billion.

The subcommittee approval sets up a fight over both the funding reduction and riders attached to the bill, both of which have come under protest from Democrats and activists who say the changes will hamstring the SEC’s oversight of the financial markets.

“We should not be cutting funding for the agency primarily responsible for preventing the abuses that caused our financial meltdown,” said Rep. Jose Serrano, a New York Democrat and the subcommittee’s ranking member, in his opening statement. Serrano attacked the riders in the bill as “divisive and partisan,” warning they would stall the budget process and leave Congress operating under a continuing resolution.

“These riders inject a level of partisan politics that is unnecessary, unwarranted and unhelpful,” Serrano said. “For all of the talk of returning to regular order, both sides of the aisle know it will be near impossible to do so without the inclusion of these veto bait provisions.”

Under the budget measure, the SEC would be barred from taking steps to “study, develop, propose, finalize, issue, or implement” a rule mandating that public companies disclose their political spending. The language extends and expands a prohibition in the current-year budget.

Also attached to the bill are requirements that the SEC report to Congress on reducing regulatory uncertainty, to root out redundant or outmoded regulations for possible elimination, and to set up an office devoted to small business capital formation. The bill strips the SEC of its up-to $50 million reserve fund set up under of the Dodd-Frank Act.

The nearly $22 billion bill also funds the Treasury Department, Small Business Administration, Internal Revenue Service (IRS), federal courts, General Services Administration (GSA), Consumer Financial Protection Bureau, and other agencies. The legislation cuts funding for nearly two dozen agencies and programs “that can operate with a little less,” said subcommittee Chairman Ander Crenshaw in his opening remarks.

The brunt of the reduction, however, is borne by GSA and IRS because they are the largest agencies in the bill, and both have adopted policies opposed by Crenshaw, a Florida Republican.

The Obama administration earlier this year released its request for a roughly $200 million funding increase for the SEC, which the commission would use to hire 250 new staffers. Half of the positions would go to the Office of Compliance Inspections and Examinations (OCIE), to strengthen thin exam coverage of registered investment advisers and other SEC registrants.