The surprise decision by Senate Banking Committee Chairman Christopher Dodd (D-Conn.) not to seek re-election this year could open the window in more than one public boardroom for a louder voice in the financial regulation debate currently underway on Capitol Hill.
Of the many elements to financial reform bills pending in both chambers, the one that is perhaps of most interest to directors of public companies is self-funding of the Securities and Exchange Commission. This has been a critical but unsuccessful mission for every SEC commissioner since the agency was founded in 1933 as a way of ensuring adequate funding in which to perform its mandate as the advocate for shareholders.
Chairman Mary L. Schapiro has been lobbying Congress to pass self-funding during the past year she has been in office. It was included in the financial regulatory reform bill introduced by Dodd, who was up for a sixth term, on Nov. 10, 2009 in the Senate. Under a similar House bill, self-funding fell shy, but there was a provision to increase Congressional funds appropriated to the agency.
Dodd’s lame-duck status could mean the SEC self-funding mechanism currently included in the bill falls off the table to other items in the measure deemed either more “pro-consumer” or more “industry-friendly” by respective parties.
George B. Curtis, deputy director of enforcement at the SEC until December when he returned to Gibson, Dunn and Crutcher, describes the agency as “remarkably underfunded” and “hobbled” in its ability to meet basic business-as-usual needs.
Curtis and other current and former agency staff say the ability to self fund from fees and fines collected from companies and individuals rather than rely on Congressional purse strings would bring state-of-the-art resources, including hundreds of additional employees as well as white-hot technology, which would increase the agency’s effectiveness.
“Self-funding has a good a chance as ever as this time,” he said yesterday, but added he did not know what the immediate impact Dodd’s announcement would have. “Chris Dodd was a firm supporter of enforcement.”
The SEC declined to comment yesterday.
Dodd, 65, stunned the political landscape with his announcement. He said he was is the “toughest political shape” of his career during a press conference surrounded by family members outside his home in East Haddam, Conn. Dodd also said that he still has “important work to do” in the Senate. Not only was he trailing in the polls, but Dodd underwent a particularly grueling personal year that included health issues and the deaths of his sister in July and best friend — in and out of the Senate — Edward M. Kennedy in August.