House Republicans Blast Schapiro on...Fracking?
In the year since the passage of Dodd-Frank, House Republicans have launched a number of attacks against the Securities and Exchange Commission (SEC), calling it wasteful, inefficient, and incompetent and blaming it for problems ranging from the Madoff Ponzi scheme to the 2008 financial crisis. The SEC has been called anti-free market, anti-business and anti-Main Street, but during yesterday’s day-long House Financial Services Committee hearing on SEC Oversight, Rep. Bill Posey (R-FL) came up with a new one; saying, “The SEC is fracking crazy!”
SEC Chairman Mary Schapiro has plenty of experience being on the defensive, but yesterday even she appeared stunned as legislators asked her why the SEC is overstepping the EPA’s authority and regulating hydraulic fracturing, or fracking, a process used to access underground reserves of natural gas and oil. Shapiro insisted that the SEC’s questions about fracking have been strictly limited to assessing the actual value of oil and gas reserves as printed in investor disclosure documents. However, several reports now claim that the SEC has asked for specific information regarding the chemicals being used as well as companies’ efforts to minimize environmental impacts, asserting that those inquiries cannot reasonably relate to valuing the assets. Further, many companies are now alleging that the SEC is requiring them to disclose proprietary information which could harm their ability to compete.
Rep. Steve Pearce (R-NM) asked Ms. Schapiro about the sources of payments to defrauded Madoff investors as well as the details of several bankruptcy cases where millions of dollars of state and federal funds were lost in bankruptcy. When Ms. Schapiro said that she was not familiar with those cases, Rep. Pearce responded that he was confused as to why the SEC is focusing its energies on regulating fracking while complaining that it lacks the resources to perform its basic duties.
While the true details of the SEC’s interest in fracking may never come to light, House Republicans are conducting vigorous SEC oversight and holding the agency to a standard that it has never in its very mixed history proven it is able to meet. Members continue to argue that the SEC will not receive more funding until it becomes more effective, and the SEC continues to insist that it cannot become more effective until it receives more funding. It’s a Catch-22 without an obvious solution.
