White House Denies Stinting on SEC Funding

The White House defended on Monday its request for Congress to give the Securities and Exchange Commission $200 million less than was demanded by a new law to fight corporate fraud.

Democratic lawmakers and consumer advocates assailed the Bush budget request as an attempt to undercut the corporate crackdown law enacted this summer in response to a wave of accounting scandals.

President Bush signed the law with much fanfare and a promise that his administration would go after corporate crooks as aggressively as it has hunted terrorists.

The law created new penalties, including stiff prison terms, for corporate fraud and document shredding, established an independent board to oversee the accounting industry and authorized $776 million for the SEC, representing a 77% jump in its budget.

In July, the White House increased its initial $467 million SEC request for the fiscal year that started Oct. 1 by $100 million, making its total proposal $567 million.

“We proposed the largest increase in the SEC’s budget of modern times, and that was part of a fiscally responsible budget that has been submitted to the Congress,” presidential spokesman Ari Fleischer said Monday.

“The budget that is proposed is the budget that the SEC asked for,” he said.

Congress’ final decision on a funding level for the SEC is hung up in the raft of spending bills that lawmakers failed to pass before adjourning to campaign for midterm elections. A Senate version of the legislation would provide $751 million for the SEC; the House hasn’t written its bill yet.

“By failing to fully fund the SEC, the Bush White House is essentially saying, ‘We don’t want an effective securities cop on the beat protecting investors from fraud,’ ” said Rep. Edward J. Markey (D-Mass.), a senior member of the House Energy and Commerce Committee.