While the federal government continued to throttle back Wednesday, companies like Moline-based Deere Inc. were racing to pocket millions of dollars in fees normally charged by the Securities and Exchange Commission.
By registering future stock and bond sales during the government’s partial shutdown, companies like Deere, Citicorp, Ford Motor Co. and Chrysler Corp. were able to take advantage of a lapse in the SEC’s authorizing legislation.
According to SEC executive director Jim McConnell, because the federal government’s temporary funding bill expired at midnight Monday, the SEC’s normal fee of 1/29th of 1 percent of the amount of securities registered reverted to the old rate of 1/50th of one percent, an amount written into law.
That means Deere, which registered with the SEC Wednesday to sell $2 billion in asset-backed securities, saved about $250,000 in fees by filing during the budget impasse.
Tuesday there were 102 filings totaling $108 billion recorded by the SEC, according to spokesman Michael Jones. That translates into $15.6 million in fees the government didn’t collect.
On Tuesday, Chrysler Financial Corp., the automaker’s financing arm, registered $8 billion in debt securities in a “shelf offering,” which means the securities can be sold from time to time when market conditions are best. The company saved $1.16 million by registering the securities during the budget impasse, according to John R. Ferry, a Chrysler Financial spokesman.
“We do the shelf registrations as a matter of business throughout the year,” said Ferry. “This one was planned and ready to go. We were looking for the right time.”
The stampede slowed Wednesday, McConnell said.
According to McConnell, by late afternoon Wednesday there were 24 filings totaling $34 billion. That translates into about $4 million in lost fees.
Leading the way Wednesday was Citicorp’s major credit card unit, which filed to sell $10 billion in certificates–one of the largest debt filings in history, according to McConnell.
Other large filers included Ford Motor Co. with $5 billion, Chemical Bank ($3 billion), Discover Card Master Trust ($3 billion), ContiSecurities Asset Fund Corp. ($2.5 billion) and Deere.
So far the fees lost are lower than the $20 million lost during a one-week span last year when Congress failed to approve the SEC’s budget on time.
Still, with $19.6 million in lost fees after just two days, there is little doubt that this year’s lost revenues will surpass those of last year, McConnell said.
The SEC takes in almost twice as much in fees as it spends in its annual budget, with the surplus going to the Treasury’s general fund, McConnell said.
McConnell added that even though it is not collecting its normal fees, the SEC, with its 2,700 employees, is in no danger of shutting down completely–yet.
“We have enough money from fees we have collected to last about 2 1/2 more weeks,” McConnell said. “He said the agency is legally required to use those funds to avert a shutdown.”
The SEC budget is included in the appropriations bills for the Commerce, Justice and State departments. Congress is squabbling over Republican demands to eliminate the Commerce Department.
Meanwhile, the House and Senate have not yet had a conference meeting to reconcile the two appropriations bills each one has passed.
Under the House bill, which appears to have enough support to prevail, SEC funding for the fiscal year that began Oct. 1 would be $297 million–the same as in fiscal 1995. The Senate cut the SEC’s budget by 10 percent to $267.3 million.
