|FOR IMMEDIATE RELEASE:||CONTACT: CHRISTI HARLAN|
|Wednesday, March 7, 2001||202-224-0894|
Sen. Phil Gramm, chairman of the Senate Committee on Banking, Housing and Urban Affairs, made the following statement today during an appearance before the Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises of the House Financial Services Committee:
"I would first like to congratulate Congressman Baker on being chairman of the subcommittee and Congressman Kanjorski on being ranking member. I want to congratulate you on consolidating financial services jurisdiction in one committee. I can assure you it will make my life much easier. I look forward to working with each of you as we try to make financial services cheaper and more available to a larger number of Americans.
"I am happy to have the opportunity today to testify on something that seems to me to be eminently reasonable and something that every member of Congress should support. That is our effort to see that we don't take fees that were established to fund the SEC and allow those fees to become a source of general revenue for the federal government.
"As you know, today, even though no one intended it, we collect six times as much in fees in securities transactions, tender fees and fees on initial public offerings as we need to fund the Securities and Exchange Commission. These fees will generate $28.9 billion over the next 10 years if we allow the current law to stand. Every mutual fund, every retirement program, every person saving for college or retirement will end up paying billions of dollars in fees that no one ever intended that they pay.
"To give you an idea of the magnitude of these excessive fees, if you take the average worker and look at a 45-year retirement program, that retirement program would pay about $1,300 in fees above the level necessary to fund the regulation that is required. If that $1,300 were invested over a person's working life instead of being paid in excessive fees, it would generate $5,800 of additional funds for retirement.
"Our bill in the Senate sets up a process that ensures that we always have enough money to fund the SEC. It guarantees that when we are collecting under our current rate structure that the fees be dropped. If we are collecting too little, then the fees will be raised. We do it in such a way that will hold the appropriators harmless. The net result is we guarantee adequate funding for the purpose the fees were originally adopted but for no other purpose.
"This is a major issue. I think that you can see what a major issue this is when you look at the groups then have endorsed the bill in the Senate. This effort has been endorsed by the TIAA-CREF, which is the nation's largest teacher retirement program. It has been endorsed by the American Shareholders Association, by the National Treasury Employees Union and by the California Public Employee Retirement System, among others.
"I believe that it is very important that we adopt this bill. We have included in the bill a pay parity provision for the SEC. In the recent past we have become concerned that financial regulators were losing people due to higher wage levels elsewhere. We raised salaries for financial regulators -- the employees of the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the FDIC and the Federal Reserve -- but a similar change was not made for the SEC. You can imagine that the rate of turnover is very high among professional people. It's fair to say that whether one believes that we need more regulation or less, there's a very strong consensus that we need to have the most qualified people conducting the regulation.
"Those are the two major elements that are the essence of the Senate bill. I want to commend it to you. We have passed the bill in the Banking Committee. It would be my goal toward the end of this month or the beginning of next month to bring this bill to the floor of the Senate, where I am hopeful that we will be successful."