WASHINGTON - Senate Banking Committee Chairman Phil Gramm introduced legislation Monday that would reduce Securities and Exchange Commission fees and allow the agency to pay its staff more.
The Competitive Market Supervision Act is co-sponsored by Sen. Rod Grams, chairman of the panel's securities subcommittee, and Sen. Charles Schumer, D-N.Y.
Sen. Gramm predicted the legislation would save investors $14.4 billion over 10 years by reducing the fees companies pay to the SEC. "Today these fees are generating about five times what it takes to run the SEC," Sen. Gramm said. "Securities fees should not be a general revenue source."
Under the bill, lawmakers would cap the amount of money the government could reap from fees on registrations, transactions, and mergers each year. The SEC, however, would be guaranteed to receive 100% of its funding. If fee revenue fell short, temporary increases would be enacted. If collections exceed the cap by more than 5%, temporary fee reductions would be made.
Sen. Gramm's legislation would also put SEC staff salaries on a par with those of the banking agencies.
Senate Banking held the first of two hearings on the bill Monday in New York. Witnesses generally praised the measure, and SEC Chairman Arthur Levitt highlighted the agency's high turnover rate, calling it a "crisis."
In the last two years, the SEC has lost 25% of its attorneys, accountants, and examiners to higher-paying employers, he said. In 1999 only 46% of the SEC's open positions were filled.
"Something needs to be done to close the pay gap and reduce the turnover problems we face," Mr. Levitt said. "The level of turnover and inability to attract qualified staff is threatening our ability to oversee the nation's securities markets and to respond in a timely manner to the changing events and innovations in our markets."
Mr. Levitt said SEC employees make 24% to 39% less than their counterparts at the banking agencies, which do not have to follow the general government pay scale.
"Implementing pay parity with the banking regulators, as your legislation proposes, would cost approximately $52 million in fiscal 2001, with yearly increases for inflation thereafter," Mr. Levitt told Sen. Gramm. "Although this is a significant amount of money, it is crucial for the Commission to have the resources it needs to fulfill its mission."
Tuesday's Senate Banking hearing focuses on the "financial marketplace of the future." Witnesses include the heads of Charles Schwab & Co., Morgan Stanley Dean Witter & Co., Goldman Sachs & Co., and Merrill Lynch & Co.