SEC's Schapiro: Budget undersized to fulfill new market-watchdog duties

SEC Chairwoman Mary Schapiro sits at the helm of America's most influential regulator of the financial markets, the Securities and Exchange Commission. She was the guest at the Feb. 22 Monitor breakfast in Washington, D.C.

What keeps her up at night:

"Everything keeps me up at night. I do feel a sense of urgency about the structural weaknesses that exist in money market funds ... that makes them prone to runs, and I feel like we need further debate and discussion around some concrete ideas there."

Lessons from the "flash crash" on May 6, 2010, when the stock market plunged roughly 10 percent and some blue-chip stocks traded for pennies before recovering:

"I do worry about market structure questions. I think the flash crash was a huge wake-up call for regulators about the frailty of our market structure.... We have done some very important things in that regard to ... shore it up. There is more to do."

Whether the SEC has the resources to handle expanded duties under the new Dodd-Frank financial regulation law:

"We were grateful to get an increase [in the SEC's budget], but we still are not appropriately sized in my view for the job that Congress has laid out for us."

Criticism that not enough top executives have been held responsible for the financial crisis of 2008:

"I absolutely share and understand the frustration that the public feels in general that people aren't being held accountable for the financial crisis.... [Our] greatest desire and goal is to bring the biggest and toughest cases and hold the maximum number of people accountable."

Response to critics who say the Dodd-Frank law will hurt US innovation and economic growth:

"We recognize the potential to have unintended conse-quences from our actions, so we are really carefully and thoughtfully ... trying to strike the right balance between fulfilling the legislative mandate ... and understanding the impacts and burdens of our different rules."

How social media such as Facebook and Twitter affect financial regulators:

"There is so much that is great about social media, but it does create challenges ... for regulators.... The incredibly low-cost ease of reaching millions of people through social media creates opportunities for mischief, without question."