The Rittenhouse Review is unsurprised that the Bush Administration didn't mean it when it committed last summer to the extremely rapid expansion of the SEC budget...

The Rittenhouse Review: ...“Less than three months ago, President Bush signed with great fanfare sweeping corporate antifraud legislation that called for a huge increase in the budget of the Securities and Exchange Commission to police corporate America and clean up Wall Street. Now the White House is backing off the budget provision and urging Congress to provide the agency with 27 percent less money than the new law authorized,” reports Stephen LaBaton in today’s New York Times (“Bush Seeks to Cut Back on Raise for S.E.C.’s Corporate Cleanup”). [Emphasis added.]

“Administration officials say their proposed increase is enough and that other budgetary needs, like the military and security against terrorism, make it impossible to afford more,” LaBaton reports.

Democratic lawmakers and SEC officials argue the decision “reflects the administration’s calculation that corporate scandals have begun to recede as a political issue. They say that the administration’s more modest increase will not be able to pay for the expanded role of the agency, bring salaries up to levels at other financial regulatory agencies, finance the start-up costs of an accounting oversight board and significantly expand a staff that is already overwhelmed.”

In other words, the SEC won’t be able to launch or complete the additional investigations and perform the oversight functions expected to result from the Sarbanes-Oxley Act to at least try to prevent a recurrence of the great corporate scandals of the past two years.

The Sarbanes-Oxley Act, signed with ersatz bravado by President George Bush, authorized a 77 percent increase in the SEC’s budget. However, all funds authorized during the federal budget process must subsequently be appropriated, a second step that allows lawmakers of the unscrupulous sort, that is, the type that populate the current administration, to back track from previous decisions while escaping the close scrutiny associated with the authorization process. In this particular case, the Bush administration is asking for appropriations for the SEC that would increase spending by just 30 percent, less than half the increased authorization in the bill, according to the Times.

Even SEC Chairman Harvey Pitt is publicly complaining that the lower level of appropriations would make it difficult for the agency to undertake important initiatives in the area of technology and enforcement.

How bad are things at the SEC? According to the Times, “nearly a year after those corporate scandals began with the collapse of Enron [Corp.], commission officials say that they have struggled to keep up with their growing number of responsibilities and cases. Senior agency officials say that they are still unable to open many of the investigations that they want and that, as cases near trial, they will be stretched thin. The agency’s computer systems have not been updated in many years. The agency is unable to review the vast majority of corporate documents filed every day. And one investment house alone, Merrill Lynch, has more professionals in its legal and compliance departments than the commission’s entire enforcement staff.”

Sen. Paul S. Sarbanes (D-Md.) called the White House position “disheartening,” adding, “I can’t understand why they are taking this position. We didn’t pull the $776 million out of a hat. The costs of increasing pay, hiring new staff and increasing the volume of their business presents a case for a higher budget that is overwhelming.”