A top Senate Democrat and senior Republican proposed on Tuesday $20 million in additional funds for the Securities and Exchange Commission to hire more enforcement staff and upgrade its technology to fight fraud.
The measure, backed by the SEC, is being offered as an amendment to a bill before the Senate that is designed to crack down on financial fraud.
"The resources are badly needed at the understaffed SEC, which saw a 10 percent decline in its employee ranks from 2005-2007," said a joint statement by Senator Charles Schumer, a prominent Democrat on the Senate Banking Committee, and Richard Shelby, the top Republican on the panel.
"The burdens on the agency have grown since that time. Currently, the SEC is investigating over three dozen cases involving subprime mortgage-backed financial instruments," the senators said.
For fiscal 2010, which starts Oct. 1, the Obama administration has requested a total of $1.026 billion for the SEC. That is a 9 percent increase over the SEC's 2009 budget. The Schumer-Shelby amendment would increase the funding for fiscal 2010.
SEC Chairman Mary Schapiro has said she plans to add more enforcement staff to focus on pursuing tips, complaints and other leads.
She has also said she plans to hire more examiners to expand the agency's inspections of credit rating agencies and to strengthen "risk-based surveillance" and examination of investment advisers.
The agency has been criticized by Congress and investors for missing red flags and not following up on complaints that may have uncovered Bernard Madoff's $65 billion investment fraud.
Schapiro has taken steps to beef up the agency's enforcement division and has hired former federal prosecutor Robert Khuzami to head that unit.
President Barack Obama supports legislation in the Senate to expand the battle against financial fraud, the White House said this week.
The Democratic-led Senate is expected to pass the legislation later this week after consideration of possible amendments.
Similar legislation is pending in the U.S. House of Representatives. Both chambers must agree on a final version before it can be sent to Obama to sign into law.
The legislation would extend federal fraud laws to mortgage lending businesses, which the federal government does not now regulate or insure. (Reporting by Rachelle Younglai and Diane Bartz; Editing by Tim Dobbyn)