Better-Funded SEC Could Have Stopped Madoff: Schumer
The Bernard Madoff securities fraud could have been avoided if the Securities and Exchange Commission had been properly funded, Sen. Charles Schumer told CNBC Thursday.
“It’s very simple. They’re understaffed,” said the New York Democrat, who added that the people who do work there are underpaid. “The best people go elsewhere if they don’t get the pay.”
Schumer proposed legislation last fall that the SEC be allowed to fund itself by keeping the fees it collects from public companies rather than giving the money to the Treasury. The Federal Reserve and Federal Deposit Insurance Corp. are self-funded.
Madoff went to prison last year for bilking investors out of $50 billion in a Ponzi scheme. A SEC watchdog later determined that a proper investigation of Madoff was never performed. The original whistleblower, Harry Markopolos, told the SEC about Madoff in 2000.
More oversight is needed, said Schumer, but it will not happen unless the SEC receives funding that can buy new technology and pay the brightest students top salaries.
Schumer also said a 7 percent tax on high user fees airlines charge would lower the incentive to impose them.
Spirit Airlines announced last week it would charge as much as $45 for each carry-on bag and Schumer said each item should be taxed 7 percent.
“The bottom line is this: I would like to ban charges on extra fees,” he said. “But they can charge $45 as long as there’s a 7 percent tax on it.”
Although personal items and anything that fits under the seat are free, Schumer still is against Spirit’s policy.
“Carry-on baggage is a necessity for three types of flyers: children, businessmen and people needing connections,” he said.