Bachus sets sights on SEC

By Peter Schroeder - 08/02/11 03:56 PM ET

The Securities and Exchange Commission (SEC) would get a major overhaul under legislation being drafted by House Financial Services Committee Chairman Spencer Bachus (R-Ala.).

The lawmaker announced Tuesday that he was putting together a bill that would combine several offices at the Wall Street watchdog, and make several other changes — including rolling back or altering recent tweaks authorized by the Dodd-Frank financial reform law.

Bachus went out of his way to say that his bill was not a critique of SEC leadership, especially Chairwoman Mary Schapiro.

“The SEC is structurally flawed and suffers from operational inefficiencies and organizational incoherence. This legislation will be a comprehensive restructuring of the SEC. It will make the SEC more efficient, consolidate duplicative offices, enable the agency to use better technology, and strengthen ethical safeguards to avoid conflicts of interest,” he said.

Several Democrats have blasted Republicans for trying to hinder the implementation of Dodd-Frank by stifling the budgets of regulators like the SEC. And it's true that Republicans have pushed budgets that either cut or hold steady the funds for regulators that have seen their workload grow significantly with the Wall Street overhaul law.

But Bachus is quick to point out that the SEC, which came under intense fire for failing to sniff out symptoms of the financial crisis before it hit, has seen its budget triple in the last decade.

“Simply providing yet more funding to the SEC without first correcting its flaws will do nothing," he said.

Bachus's bill makes a slew of technical changes to the SEC's structure and operations. It would consolidate several offices within the SEC, and require the agency to submit to Congress by the end of January its agenda for each year.

It also would require the SEC to establish a system for documenting employee recusals, in an attempt to address "revolving door" concerns with SEC employees leaving to join the private sector. It also would require the new SEC ombudsman, created by Dodd-Frank, to report directly to the SEC chairman, as opposed to the Office of the Investor Advocate.

It would also limit the use of a new $100 million reserve fund — which House Republicans have blasted as a "slush fund" for the agency — to "badly-needed" technology upgrades.