A view of the U.S. Capitol Building in Washington, D.C. and a red stoplight.
A view of the U.S. Capitol Building in Washington, D.C. and a red stoplight. - 
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Bob Moon: Just two words tell the story of the hour: No progress. We're only hours away from a government shutdown, which will have serious consequences for financial operations throughout the country.

Our D.C. bureau chief John Dimsdale is here. Hey John.

John Dimsdale: Hey Bob.

Moon: First off -- this being Marketplace -- I'm wondering what's going to happen to the financial cops on the beat when the government closes up shop?

Dimsdale: Well there are two different types of regulators; those that are funded through user fees paid by businesses don't have to rely on the federal budget. So that means business as usual at bank regulators, like the Federal Reserve or the Federal Deposit Insurance Corporation. But the Securities and Exchange Commission is another story. They oversee stocks and bonds and those employees will be furloughed. Now all the routine filings and reports that companies are required to submit to the SEC will continue; that's all done electronically these days. But nothing is going to be done with those filings.

I talked today to a former SEC staffer who was there during the last shutdown back in 1996. Jim Moloney is now a partner at Gibson, Dunn & Crutcher in Los Angeles, and he says the backlog will quickly become a problem.

Jim Moloney: That computer system is just full of filings which have not been assigned to examiners to reviewers. So there is a little bit of a digging out, if you will, from sort of a snowstorm of paper that has come in while the government employees have been home.

Dimsdale: So that means companies that want to issue new stocks and bonds, or maybe put a question to shareholders at an upcoming annual meeting are going to have to wait for regulatory approval.

Moon: John, what about SEC investigations into wrongdoing, are they going to keep tabs on the bad guys?

Dimsdale: Investigations that are at some vital stage -- say, for example, the bad guys just about to get away with the money -- those are going to continue. SEC lawyers will meet their court dates. But you know, all the time that there are companies trying to pump up their stock prices with false earning statements or bogus announcements. And Moloney says without the SEC around, there's potential for a lot more fraud.

Moloney: As an investor, you just want to be more on guard, sort of if you're walking in a neighborhood and the police are not there, you'll probably be more cautious as to looking at who's behind you and who's on the other side of the street.

Moon: How else are companies going to miss the government, John?

Dimsdale: If you're a airplane maker and looking for government approval of some new design, the federal aviation officials aren't going to be answering their phones. And if you rely on government statistics -- those reports like trade figures or weekly unemployment claims or the inflation numbers -- you're going to be out of luck.

Moon: Gee, John, this sounds pretty bad. Is there any good news out there at all?

Dimsdale: Well, I'm looking forward to a quick and easy commute on Monday.

Moon: Our D.C. bureau chief John Dimsdale, thanks.

Dimsdale: Thanks, Bob.