Starving the financial cops

May 4, 2011

What is easier to regulate, financial markets or the nuclear industry?

If it is a matter of resources, financial markets must be very easy to regulate.

Congress sets the budget for the regulation of both industries and here are the numbers from 2009 (except nuclear industry revenue data from 2010).

I thought it would be interesting to compare industry revenues to the budget of the regulators.

Industry Industry revenues — Regulatory budgets — 2009

Regulatory %

Financial services $517 billion (data) SEC: $961 million (data

CFTC: $146 million (data)

Nuclear $ 33 billion (data) NRC: $1,046 million (data) 3.16%


Do you think a budget of less than one quarter of a percent (0.21%) is enough money to oversee and enforce the law on Wall Street?

Do you think that the nuclear power industry is so much less law-abiding than Wall Street and requires so much more regulation?

The SEC and the Nuclear Regulatory Commission collect almost all of the money for their budgets from those they regulate.  There should be no reason to skimp on oversight because of the size of the federal deficit. The industry pays to play.

The New York Times Dealb%k has a very dispiriting report today from Ben Protess about the extreme budgetary hardships that our securities regulators face as they try and regulate the financial markets.

From Dealb%k:

On a recent trip to New York to tour a trading floor, a group of employees from the commodities watchdog [CFTC] rode Mega Bus both ways, arriving late to their meeting despite a 5:30 a.m. departure.

The bus, which cost $30 a person round trip, saved the agency roughly $1,000 over Amtrak.

“We spent hundreds of billions of dollars on a hideous bailout, and now we’re not going to fund reforms to prevent another one,” said Bart Chilton, a commissioner with the agency.

It’s really just shameful that our financial cops are basically riding a bicycle trying to police Wall Street traders and bankers who are flying around first class.

When the next financial crisis happens (Jamie Dimon says its normal for them to happen every five years) and more trillions of people’s savings and investments evaporate we will lament this skimping.


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SEC Chair Mary Schapiro is testifying this morning before the U.S. Senate Appropriations Committee in support of the SEC’s $1.407 billion budget request for fiscal year FY 2012. The SEC submitted the request in February, which seeks an increase of approximately $222 million beyond the $1.185 billion Congress recently agreed to allocate to the SEC for FY 2011. chapiro-explains-how-sec-would-use-1407- billion-budget-requested-for-fy-2012/art icle/202098/

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