White Makes Case for Bigger S.E.C. Budget

Mary Jo White cleared a rite of passage on Tuesday: she asked Congress for more money.

Like most Securities and Exchange Commission chiefs before her, Ms. White testified before a Senate Appropriations subcommittee to outline her agency’s need for a bigger budget. In the testimony, she called for new resources to complete an overhaul of financial regulation and to keep a closer eye on Wall Street fraud.

Under President Obama’s budget plan, the S.E.C. is seeking $1.67 billion for the 2014 fiscal year, a roughly 26 percent uptick from the current level.

“The S.E.C.’s current level of resources still presents significant challenges as we seek to keep pace with the growing size and complexity of the securities markets and fulfill our broad mandates and responsibilities,” Ms. White said in written testimony to the Senate subcommittee.

Ms. White’s predecessors have wrangled with Congress for years, seeking to pry open its purse strings. Under Mary L. Schapiro, who ran the agency in the aftermath of the financial crisis, the S.E.C. squeezed out a roughly 50 percent budget increase.

Republican lawmakers have balked a major budget increases, saying the agency should learn to do more with less.

But Ms. White, who joined the agency last month, noted that the S.E.C.’s budget comes at no cost to taxpayers. Rather, it’s “deficit-neutral,” meaning the cost is offset by fees the agency levies on the financial industry.

And her request, she noted, comes at a time when the agency is struggling to keep up. It has fallen behind in writing dozens of new rules for Wall Street under the Dodd-Frank Act. It also inherited new oversight powers over hedge funds and the $700 trillion derivatives market.

The agency’s examination of investment advisers has also lagged, Ms. White said. In the 2012 fiscal year, the S.E.C. inspected only about 8 percent of registered investment advisers.

“The current level of resources is not sufficient to permit the S.E.C. to examine regulated entities and enforce compliance with the securities laws in a way that investors deserve and expect,” Ms. White said.

Ms. White, a former federal prosecutor turned white collar defense lawyer, emphasized a need for new cops on the Wall Street beat. Under the new budget plan, the S.E.C. would try to add 676 staff members, including 131 for the enforcement division that polices financial fraud.

“Strong enforcement of the securities laws is necessary for investor confidence and is essential to the integrity of our financial markets,” she said.