Could the SEC be a self-funding organization?

Following up on this item from last week, I came across this post, which compared the SEC's total budget (currently $1.1 billion annually) to some other banking industry figures of note. The list definitely helps put some things into perspective as far as what the SEC is up against, and probably helps explain why financial crime has not been more heavily prosecuted.

The original post is a bit wordy, so I'll excerpt Barry Ritholtz's paraphrase instead:

1. Bank of America spent over $2 billion on marketing in 2010.

2. JPMorgan’s litigation reserves: $4 billion (Q3 2010) 

3. Goldman Sachs Q4 2010 compensation and benefits: $2.3 billion 

4. Note that Goldman Sach’s $550 million fine last year was about HALF of the SEC’s proposed budget. 

5. JPM spent $1.2 billion in Q4 2010 on technology, communications and equipment expenses. 

6. As a reward for Bank of America’s purchase of Merrill Lynch’s rotting carcass, the government gave it a $20 billlion TARP loan. 

7. Citi’s marketing and advertising cost the bank $1.6 billion in 2010. 

8. The SEC now must regulate hedge funds, manage their registration, etc. In Q4 2010, the hedge fund industry added $149 billion in new assets. 

9. AIG recieved loans, guarantees and bailouts worth $185 billion dollars. 

10. Cheers! Americans spent $4.7 billion on beer, wine and liquor in the month of December 2010.

I think the one that stands out to me most on that list is #4--the Goldman Sachs fine in 2010 (which was widely considered to be just a slap on the wrist) was in an amount large enough to cover a full half of the SEC's annual operating budget.

Given how many violations continue to occur (both in the foreclosure arena and elsewhere) in the banking industry, I wonder whether a properly-manned SEC could in fact be self-funding. I certainly don't mean to propose a Stasi-like SEC which scours the earth and turns firms upside down in search of fineable offenses so as to cover the expenses of an over-extended government (actually, as a fund manager, that thought terrifies me)... but I do think that it's a concept that warrants mentioning as long as the issue of SEC funding is being debated.

If the SEC is working properly (which, as of now, it most assuredly is not), it should in fact be (at least partially) a self-funding organization, much like the IRS's audit division. I think our friends in Washington often miss this point when they look at line items in the budget simply as "costs"--some of these "costs" can in fact be revenue-generating, and eliminating them will not necessarily make the whole entity more profitable. I compare it to a struggling company trying to balance its books by slashing its marketing expenditure--it's not gonna work. Anyway, it's food for thought...

[Forbes]  
(h/t The Big Picture)