House committee votes to raise SEC pay

At its first markup session, the newly-named House Financial Services Committee voted last week to raise the pay of the men and women charged with enforcing securities laws and to reduce the fees the government charges for securities transactions. The bill (H.R. 1088) would raise the pay of employees at the Securities and Exchange Commission to a level equal to other government financial agencies, such as the Federal Reserve and the Comptroller of the Currency. It would also reduce the fees to the revenue level needed to support SEC operations. The fees were originally levied in the 1930s. As the volume of investments soared in recent years, the government has been collecting at least five times as much money as the SEC needs. The excess money, which amounts to about $2 billion this year, has been going to the general fund. "Whether bull or bear, the markets have become a cash cow for the U.S. government," said Rep. Michael Oxley, R-Ohio, chairman of the committee, known as the House Banking and Financial Services Committee in the 106th Congress. "Since 1990, American investors have been overcharged $9.2 billion. This money rightly belongs in the accounts of American investors, not government coffers." But Democrats were not convinced that reducing SEC fees is the best use of the government's money. Ranking Democrat John LaFalce of New York said, "What we are doing is choosing to reduce fees for investors, rather than homeowners or some other group of people." He also complained, "We are focused on the trees, when the forest needs our attention. We are not asking whether current SEC oversight is adequate." The Democrats offered several amendments to try to seriously alter the legislation. The first, proposed by Rep. Barney Frank, D-Mass., would simply eliminate the provision reducing the SEC fees. The new bill would be titled the "SEC Pay Parity Act." The amendment was defeated, 12 yeas to 46 nays. Another amendment, offered by Rep. Paul Kanjorski, D-Pa., would require a General Accounting Office review of the cost of securities law enforcement throughout the government, not just at the SEC. He argued that SEC fees should be used to fund enforcement at every agency. The amendment was defeated, 14 yeas to 37 nays.