- The Washington Times - Thursday, March 8, 2001

The fees that consumers and companies pay the Securities and Exchange Commission to support its operations would be reduced under legislation Congress is considering.

In fiscal 2001, the agency will collect nearly six times its annual budget from the fees, SEC Acting Director Laura S. Unger said yesterday at a hearing before the House subcommittee on capital markets, insurance and government sponsored enterprises.

The agency collects the fees from individuals or institutions buying and selling stock, from firms going public and from companies completing mergers or acquisitions.

Rep. Michael G. Oxley, Ohio Republican, said he plans to introduce a bill to cut fees in the next few weeks. His proposal will be similar to one co-sponsored by Sens. Phil Gramm, Texas Republican, and Charles E. Schumer, New York Democrat, who also testified before the House subcommittee.

"The fee was imposed for a specific purpose, and the fee is not now being used for that purpose," Mr. Gramm said.

President Clinton opposed a similar measure last year, but Mr. Gramm said he expects President Bush will support it.

Ms. Unger estimated that the SEC will collect almost $2.5 billion in 2001.

In contrast, the agency's budget for this fiscal year is $422.8 million. The bulk of the surplus fees, $1.5 billion, will go into the Treasury general fund. Congress can appropriate the remaining half-billion dollars as it chooses.

The Senate bill would cut the corporate fees by two-thirds, while the consumer transaction-fee level would be determined by appropriators. Mr. Gramm said the Senate Committee on Banking, Housing and Urban Affairs approved the measure by voice vote in mid-February.

He said the federal government should not be able to use the fee revenue for any other purpose because it was earmarked for the SEC.

"This is a fee and not a tax. This is a user fee," he noted.

The executive vice president of a teachers' retirement fund told the House panel that his group paid $1.1 million in SEC fees last year.

"While we support the notion that market participants should fund the SEC's operation through user fees, the current fee levels are no longer appropriate," said Scott Evans of the Teachers Insurance and Annuities Association College Retirement Equities Fund.

Ms. Unger expressed support for the bill, but also said she was concerned about whether her agency would continue to be fully funded.

"Fee reductions must be consistent with full and stable long-term funding for the SEC so that the agency can continue effectively to perform its statutory mission of protecting investors and maintaining market integrity," she said.

Mr. Gramm's bill also includes a proposal to increase SEC employees' salaries, which he said are out of line with regulators' pay at other federal agencies.

Ms. Unger said that because of financial modernization legislation passed last year, banking regulators work together more often but receive different levels of pay.

Mr. Oxley said he is not yet sure whether he will include a pay parity measure in his version of the bill.

The dissenting voices on the subcommittee belonged to Democrats, who were upset over the loss of contributions to the general Treasury fund.

Rep. Paul E. Kanjorski, Pennsylvania Democrat, said that the money could be used for community reinvestment, environmental causes or fraud prosecution.

Those misgivings notwithstanding, the majority of the subcommittee's members supported the bill. Staffers said it should pass the full House when introduced.

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