Opening Statement
Rep. Randy Neugebauer
Financial Services Committee
“Fixing the Watchdog: Legislative Proposals to Improve and Enhance the Securities and Exchange Commission”
September 15, 2011

Thank you, Chairman Bachus, for holding this important hearing, and I thank the witnesses for being here today to testify and work with us as we look for ways to strength the Securities and Exchange Commission.

As we begin this hearing today, I believe it would be beneficial to revisit some of the recent headlines the SEC has found itself in over the last few years:

• The Washington Post: “Report Says SEC Failed in Oversight of Bear Stearns1”
• CBS News: “Court Documents Show How SEC Failed to Nab Madoff in 20062”
• The Washington Post: “The Madoff Files: A Chronicle of SEC Failure3”
• CNBC: “SEC Ignored Complaints About Stanford: IG Report4”
• ABC News: “How Big Is the SEC’s Porn Problem?5”
• The New York Times: “S.E.C. Hurt By Disarray In Its Books6
• The Government Accountability Office: “Improvements Needed in SEC's Internal Controls and Accounting Procedures7”
• CNBC: “SEC Wasting Millions on Office Space: Report8”
• The New York Times: “S.E.C. Files Were Illegally Destroyed, Lawyer Says9”
• Reuters: “SEC Head Regrets Handling of Becker-Madoff10”

Mr. Chairman, that is quite a list. I know many of us here in this room were shocked when we saw those headlines and read the stories behind them. But perhaps the most shocking story I have seen recently is that the SEC wants more money to fund its operations. What we have seen is that it was not lack of funds or lack of regulators that led to colossal failures at the SEC; it was simply regulators not doing their jobs. And as the leasing debacle has demonstrated, the SEC cannot be trusted with an expanded checkbook.

In March, Chairman Schapiro stated that “Dodd-Frank will require significant additional resources or a substantial reduction in the performance of our core duties.” While I do not doubt Dodd-Frank is unnecessarily consuming the resources of several businesses and government agencies, I would be interested in knowing at what level the SEC feels it has been performing its core duties.

We are here today to discuss the recommendations of a report – one that cost us nearly $5 million to get – on how to improve the SEC. While there are several recommendations contained in the report, ultimately the main solution I keep hearing is “more money.” To me, this situation brings to mind the absurdity of an underperforming employee asking for a raise. That is not how a business would spend money its money, and this not how we should spend the taxpayers money.

Bernie Madoff, Mark Allen Stanford, David Becker, office leases, improper record destruction… the issue here is not how much we are spending, but how we are spending it. There is no reason why we cannot accomplish our goals with the money we have. Until the SEC can demonstrate that it knows how to properly manage – not spend, but manage – the money it already has, I question the wisdom of increasing its budget.

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References:

1 “Report Says SEC Failed in Oversight of Bear Stearns,” The Washington Post, 27 September 2008
2 “Court Documents Show How SEC Failed to Nab Madoff in 2006,” CBS News, 12 March 2009
3 “The Madoff Files: A Chronicle of SEC Failure,” The Washington Post, 3 September 2009
4 “SEC Ignored Complaints About Stanford: IG Report,” CNBC, 16 April 2010
5 “How Big Is the SEC’s Porn Problem?” ABC News, 25 March 2010
6 “S.E.C. Hurt By Disarray In Its Books,” The New York Times, 2 February 2011
7 “Improvements Needed in SEC's Internal Controls and Accounting Procedures,” The Government Accountability Office, 29 March 2011
8 “SEC Wasting Millions on Office Space: Report,” CNBC, 24 May 2011
9 “S.E.C. Files Were Illegally Destroyed, Lawyer Says,” The New York Times, 17 August 2011
10 “SEC Head Regrets Handling of Becker-Madoff” Reuters, 10 March 2011