White House Rejects SEC Budget Request to Boost Worker Pay

The White House’s Office of Management and Budget is rejecting Securities and Exchange Commission Chairman Harvey Pitt’s request for an additional $76 million in fiscal 2003 to increase SEC employee pay to levels of other federal staff, Pitt said Wednesday.

Pitt has been trying to get more money for the SEC amid a surge in agency accounting probes launched since Enron Corp. failed. Under a House bill, the SEC also would be responsible for setting up and monitoring a new accounting-industry oversight panel.

Many in Congress are sympathetic to Pitt’s efforts to boost the SEC’s budget. At a hearing Wednesday, Rep. Frank R. Wolf (R-Va.), chairman of the House Appropriations subcommittee on commerce, offered to intercede with the Office of Management and Budget to get Pitt the money he wants.

“Your budget is so small,” Wolf told Pitt. “To establish credibility and confidence in the markets is so important.”

President Bush requested a 6.6% increase in the SEC’s budget, to $467 million, in the next fiscal year. The House Financial Services Committee last week authorized a 77% increase, to $776 million.

The Bush administration has offered Pitt some additional funding: The administration recently approved $20 million to fund 100 new positions at the agency.

But Pitt said the SEC probably needs more than 100 new staffers to deal with its rising workload.

The SEC almost tripled its number of financial fraud investigations in the first two months of this year in response to an outpouring of tips and complaints. SEC staff also is reviewing the financial reports of the 500 largest U.S. companies.

The Office of Management and Budget will consider Pitt’s request for pay raises after he submits a plan to base pay increases on merit rather than across the board, spokeswoman Amy Call said.

“We look forward to seeing a merit-based plan from the SEC,” she said.

Pitt said he is hopeful a resolution will be reached. “We’ll meet with OMB. Being an eternal optimist, we’ll eventually either be able to persuade them or wear them down,” he said.

Pitt, a Republican, praised a bill approved Wednesday by the Republican-dominated House Financial Services Committee that gives the SEC discretion in forming a new accounting oversight group. The panel rejected Democratic bills that would have given the group more disciplinary authority.

Pitt said the SEC plans to propose rules to create an accounting oversight group as early as next month. The agency is likely to approve rules for the new group, as well as an assortment of other post-Enron disclosure measures, by the end of the year, he said.