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Senate Passes 1995 Budget for Cash-Starved SEC : Legislation: Chairman blasts lawmakers for allowing Republicans to delay approval.

October 10, 1994|From Bloomberg Business News

WASHINGTON — As one of its final acts of the year, the Senate passed a new budget for a money-short Securities and Exchange Commission.

On a voice vote Saturday, the Senate approved the fiscal 1995 package of $125 million for the SEC, which had to trim fees, curtail operations and prepare for possible reduced workweeks.

SEC Chairman Arthur Levitt Jr. called his first news conference Friday to blast the Senate for permitting a few Republicans to postpone action. "I am deeply distressed," Levitt said.

The agency's fiscal 1994 budget expired Sept. 30. Struggling to make financial ends meet, Levitt halted routine examinations and confined SEC activities to court-ordered appearances and cases of suspected fraud.

The delay also forced the agency to cut nearly in half registration fees for new stock and debt offerings, giving corporate America a bonanza and pinning a big loss on taxpayers.

Authority to charge higher fees expired last Friday, the end of fiscal 1994, and could not be resumed until the SEC got a new budget. The fees that the agency charges to register securities dropped to 1/50 of 1% of the amount to be sold from 1/29 of 1% at the beginning of the government's fiscal year on Oct. 1. The reduced fee represented a loss of about $144,000 for each $1 billion of securities registered.

Thursday and Friday alone, companies ranging from J.P. Morgan & Co. Inc. to American Express Co. to Citicorp's credit card unit filed registration statements for more than $65 billion in so-called "shelf filings," which allow companies to register securities that can be brought to market any time in the following two years.

As of the close of business Thursday, the Treasury had lost $10 million of registration fees it could have collected at the higher level. "People understand what is going on and they are getting in while the going is good," Levitt said.

The SEC funding measure had been trapped in the Senate because it was the last spending bill left this year. As such, it was the last one to which senators could attach pet spending amendments.

Earlier this week, the SEC budget was held up by Republican senators, including Orrin Hatch of Utah and William Roth of Delaware, who wanted to attach a provision that would allow millions of self-employed people to deduct a portion of their health insurance premiums from their taxes.

Hatch lifted his hold Thursday, and other Republicans lifted their holds Saturday. They did so only after the House adjourned last night, meaning they couldn't get the needed approval from that chamber for any change in the SEC budget.

If the Senate had failed to approve the spending package, the SEC was prepared to trim its work force by going on a reduced work week. Levitt said his agency was ready to send out notices Tuesday, saying that furloughs would occur in 30 days. If that happened, he said, about 70% of SEC employees would have been limited to two-day workweeks.

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