By Maxine Shapiro, KERA 90.1 commentator
Dallas, TX – With investor confidence dwindling as corporate accounting problems mount, you would think President Bush would reflect this concern in his budget. He didn't. I'm Maxine Shapiro with KERA Marketplace Middays.
The President basically jilted the SEC, the Securities and Exchange Commission. That's the regulatory agency that polices publicly-owned companies.
"Corporate America must be made more accountable to employees and shareholders and held to the highest standards of conduct," President Bush said in his State of the Union Address. Who do you think oversees that?? The SEC.
The SEC was established in 1934 after the Great Crash of 1929. Congress at the time knew that the public no longer had confidence in the market. Hearings were held and solutions were found. Hence the Securities Act of 1933 and the Securities Exchange Act of 1934. According to the SEC they boil down to this:
Companies who publicly offer securities for investment dollars must tell the public the truth about their businesses, the securities they are selling, and the risks involved in investing. And brokers, dealers, and exchanges must put the investors interest first. Fundamental to the SEC's effectiveness is its enforcement authority. And you and I both know it takes money to do that.
As reported in yesterday's Wall Street Journal, the New York regional SEC office lost half of their 137 member staff in a two-year period. These people all moved to the private sector where salaries are much higher. Actually, three weeks ago the President signed legislation that would raise the staff's pay to equal their counterparts at the banking ? regulation agencies. He reneged. As relayed to the staff via e-mail, nothing in his budget accounted for the raises. In an industry where it's literally ALL ABOUT money, you gotta fork it up. For KERA Marketplace Middays, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 PM.