Are You Fucking Kidding Me ??? - SEC Financial Regulatory Powers Might Be Handed Over To Wall Street

[WillyT]

Investors May Lose as Congress Saves Money on Adviser Oversight
By Alexis Leondis and Zeke Faux - Bloomberg
Jun 27, 2011 9:01 PM PT

<snip>

Congress may hand oversight of almost 12,000 investment advisers to Wall Street’s self-funded regulator as a cost-saving measure. The price could be paid by investors.

The Financial Industry Regulatory Authority, deputized by the government to oversee brokers, is lobbying to replace the U.S. Securities and Exchange Commission as a regulator of registered investment advisers who manage about $40 trillion. Congress is considering the move as a cheaper alternative to increasing resources for the SEC, since Finra’s $877 million budget is paid by the brokers it regulates.

“It’s a very bad idea to expand the notion of self- regulation,” said Denise Voigt Crawford, former commissioner of the Texas State Securities Board. “They’re supposed to oversee the activity of the industry, but they are industry.”

Finra, established in 2007 by the merger of the National Association of Securities Dealers and most of the New York Stock Exchange’s regulatory unit, has done a poor job of protecting investors, said Crawford, who retired in February after 17 years as a securities commissioner. Fines imposed are usually a fraction of the damages suffered, and Finra fails to share information regularly with state regulators, she said. The regulator fined members almost $43 million last year, while the SEC, working with a similar budget, issued more than $1 billion in penalties.

The Finra arbitration process is flawed, said Lynn E. Turner, who served as the SEC’s chief accountant from 1998 to 2001. Investors who won Finra arbitration awards last year got back less than half of what they sought, data from Securities Arbitration Commentator Inc. show.

<snip>

More: http://www.bloomberg.com/news/2011-06-28/investors-may-lose-as-congress-saves-money-on-adviser-oversight.html

The entire New Deal appears to be on the chopping block!

:wtf:

:banghead:

:mad:

:kick:

[montanacowboy]

1. Maybe people will stop buying stocks

bwahaaaaaaaaaaaaaaaaaaa that would serve them right

[DocMac]

71. I stopped

buying stocks a couple years ago. I'm better off having done so. Opt out of 401K's and save like crazy.

[bvar22]

83. We did too in 2006/2007.

Wall Street & the Big Banks can live or die without our money or concern.
Even with the penalties on the 401K, we saved a bundle.
We bought Bubble Proof rural land in the South were we now live and grow our own food.

[raouldukelives]

74. I stopped as well

Can't be anti-war and then turn around and profit off the MIC through my 401k. If your not part of the solution...Well, then keep on giving big oil, pharma and death merchants your money.

[FredStembottom]

79. I stopped when Glass-Steagall was repealed.

back in then 90's.
Haven't lost a penny since.

[davidwparker]

84. good insight. n/t

[stockholmer]

87. so you bought gold, silver, play the Forex & commodities markets? Or you just went to holding $$'s?

If you just went to US dollars since 1999 or so, you are WAY down in actual accrued wealth, due to inflation.

Even If you were ONLY buying into the teeth of the manic parabolic gold bubble of January/February 1980, you would have been in the black since 2007, if you were buying in 1977, 1978, and the first half of 1979 you were ALWAYS in the black, and if buying in 1982 to 1985 (and almost all of the rest of the 1980's), you were in the black from 2005 onwards. If you had been buying from the end of 1997 up until 2005, you would have seen huge profits of over 300 to 600 percent already, just in gold. Silver is even more dramatic in its rate of return, even with the very recent pullback from $47/$49 an ounce to $35/$$37 an ounce.

Gold has increased by double digits as a percentage gained for the last 10 years in a row. Can you say the same of the NASDAQ? The Dow? The S&P? The US dollar? US Treasuries? The average US IRA? LOL! How about your paycheck? How about the value of the average American house? Not so funny for the average American.


I have been long gold AND silver since 1998 and 1999 (in physically-held, allocated non-bank secure vault accounts), when the US trashed the Glass–Steagall Act and legalized derivatives under the Clinton/Rubin/Greenspan troika. I have an average gain of over well over 300%, whilst the Dow is utterly stagnant from the tech bubble crash of early 2001 till now. In fact, it is off greatly, due to inflation, and many were crushed in the stock crash of 2008-2009, and pulled out, locking in huge losses that they could have somewhat recovered in the QE 1 and QE 2 fueled bubble that is now unraveling. Check back with me in 3 or 4 years when those 300% figures are closing in on 1000% profits.

In 1970, the average US car cost $3900 and it took 114 ounces of gold to buy. In 2011, that same car is around $29,000 yet takes less than 19 ounces of gold to buy. Hello dollar debasement!

Plus, when the Fed fund rate peaked under Volcker in the middle of 1981 at 20%, the US national debt was only 1 trillion, today it is 14 times that (soon to 16 times that) , and even a move of the Fed's Fund Rate (it is now and has near zero% since the 2008 crisis) up to only 5% or 6% (hardly the 20%+ that the PIIGS are paying) would mean well over a trillion in debt service payments over just ONE year. If/when the funds rate does double digits, say hi to $1.5 to 2 trillion a YEAR in debt service payments alone.

If you are holding long term US treasuries, you will be the one gasping soon, unfortunately. Bill Gross of PIMCO ( director biggest bond fund in the world) pulled completely out of ALL US debt over a month and a half ago. I suggest you do the same.

[drm604]

2. Absolute insanity.

:banghead:

[ceile]

3. Through the looking glass. n/t

[SammyWinstonJack]

5. Wall St smiling like the Cheshire Cat.

[LiberalAndProud]

4. Jaw dropping. Astonishing.

My matress is beginning to look like an inviting cache for my savings. Wait, what savings?

Given that, I guess it won't be so bad when the wealthy start stealing each other blind.

[Enthusiast]

61. Astonishing is a good word.....nt

[PoliticAverse]

6. It's more efficient this way, cuts out the middleman... n/t

[RUMMYisFROSTED]

60. True dat.

[Dept of Beer]

73. This guy?

[CrossChris]

7. Only a Democratic President could abolish the New Deal

It takes a Democrat to lull his base to sleep with his personality and the story of his personal triumphs to pull this off. A Republican would have people marching in the streets.

A Democratic President has his own base divided between those who are loyal to Democratic principles, and those loyal to the person holding office as a Democrat. That's the winning formula, and probably the reason why he was allowed to take office.

[inna]

10. Insightful.

[Doctor_J]

57. Yup. Smirk would not have gotten away with this

Nice observation by Crosschris

[democracy1st]

11. K & R

[WillyT]

16. + 1,000,000,000... What You Said !!!

:beer:

:smoke:

:hangover:

[hifiguy]

19. Correct in every detail

Kicked.

[krabigirl]

21. Yep. Working as intended?

[blindpig]

23. You are right.

That's been the game all along, that's where the 'audacity' is.

[Name removed]

25. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Name removed]

29. Deleted message

Message removed by moderator. Click here to review the message board rules.

[ProSense]

38. WTF?

This has nothing to do with President Obama or Demcorats.

This is about BS legislation being considered by House Republicans, who are going after the CFPB and SEC.

[WillyT]

41. Well That's Good To Know, However, What That Means, If It Comes To Pass...

is that Obama and Democrats signed off on it.

And since nobody is sure what is on/off "the table" anymore, we'll just have to wait and see what we keep, and what is bargained away.

IOW - If it were to pass... nobody is going to be surprised any longer.

:shrug:

[ProSense]

42. Like

every other ridiculous bill passed by House Republicans, it would not pass the Democratic Senate.

[inna]

44. what is your assertion based on? links, please.

[ProSense]

56. From the OP:

"Congress may hand oversight..."

Congress = House Republicans.

Dodd-Frank is already the law. House Republicans are trying to amend and repeal significant parts of the law.

Congress is not the Obama administration.

[stockholmer]

89. wow, you are so so so blind

Attitudes like this GUARANTEE the tyranny will become complete. Awake please from your willful ignoring of the false left-right paradigm.

"The argument that the two parties should represent opposed ideals and policies, one, perhaps, of the Right and the other of the Left, is a foolish idea acceptable only to doctrinaire and academic thinkers. Instead, the two parties should be almost identical, so that the American people can throw the rascals out at any election without leading to any profound or extensive shifts in policy. Then it should be possible to replace it, every four years if necessary, by the other party, which will be none of these things but will still pursue, with new vigor, approximately the same basic policies."

Carroll Quigley, (Tragedy and Hope-1966)

[readmoreoften]

45. +1000. And apparently only a Democrat can destroy public education and nod towards SSI cuts.

The Dems have become a spoiler in a one party race. That's an accomplishment on par with the German SPD of the 1920s. They went from being Social Democrats to the left of today's US democrats to operating the Freicorps and killing their own left members.

Both parties have become dangerous in my opinion. (Well, the Republicans always were of course...)

[Lorien]

46. Exactly. Not truly a Democrat though

a corporate lackey in donkey's clothing.

[cui bono]

48. +1

[Starry Messenger]

50. Yes.

[rhett o rick]

51. .

[Junkdrawer]

52. Looks to me like Obama was created for just this purpose...n/t

[FiveGoodMen]

82. EXACTLY!

[MissDeeds]

58. Well said

[peace frog]

65. Smoothing the path for the next GOPer POTUS

He/she will enjoy carte blanche after Obama exits the WH.

[woo me with science]

66. Some of us have been screaming this all along

and trying to get people to listen.

Thank you for saying it here.

[myrna minx]

69. +1

[FiveGoodMen]

81. Oh, I think a republican disguised as a Democrat could do it.

Especially if they were a woman, a black man...something glass-ceiling-breaking.

You'd almost think we were doomed before the '08 primaries.

[davidwparker]

85. +1

[obxhead]

86. Well said.

You can either be loyal to Democratic policy, or to the President. You can't be both though in any real sense.

[CrossChris]

90. I think that represents the real split we see here on DU. I think some of that's intentional.

I think some of Obama's most loyal supporters know that pitting Obama the Democrat versus the Democratic platform will split the opposition to his policies.

[stockholmer]

88. +100000, you are on the right track to understanding the game that's being played, too bad there are

so many willfully blind sheep in the USA who simply follow the shepherd's false clarion call of the shambolic paradigm that is the utterly failed 2 party democratic governance system in America.

[McCamy Taylor]

93. Excuse me. Congress is the one that controls funding. What you posted is misleading.

[CrossChris]

95. And the President is head of his party. I was responding to the last line of the OP.

Most of that post was relevant to Congress, but I was expanding on that thought that the New Deal is being abolished in front of our eyes, under a Democratic administration.

[w4rma]

8. WTF! (nt)

[hulka38]

9. Well at least the facade of an independent SEC would end. n/t

[Kaleko]

30. A silver lining to a stormfront of destructive idiocy, yep.

[democracy1st]

12. K & R

[valerief]

13. When the fox guards the henhouse, only the fox gets out alive. nt

[onethatcares]

14. can we just privatize social security already?

I mean why the song and dance?

[russspeakeasy]

63. it's just a matter of time before it is exposed to us.

all this bullshit rhetoric is professional wrestling for our entertainment.

[Proud Liberal Dem]

15. The article just says "Congress"

Who's proposing this? The House? The Senate? President Obama? The article is vague on this point. This sounds like something that the GOP-controlled House would be pushing for, particularly since they're looking to gut the entire Dodd-Frank law. Anybody have any more information on this? :shrug:

Edited to add: The article is about an outside group lobbying to do this. If anybody in Congress is actually proposing it, the source remains unknown.

[Ruby the Liberal]

32. FINRA is proposing it

Because you just KNOW there will be taxpayer dollars funneled their way if it ever becomes law.

[ProSense]

55. House Republicans,

but let's grab an article about a House Republican proposal, something not even being considered by the Senate, strictly House Republicans, and pretend that this is Obama's doing.

He's ruining America as we know it!!!!

[Proud Liberal Dem]

67. It's easy to get an inflammatory anti-Democratic/Anti-Obama story going around here

Sometimes (perhaps even a lot of the time) the facts and/or the actual substance of the "story" don't actually support the headlines or are just rampant speculation. It's one thing to be critical about something but it's a whole other thing to present false, misleading, or just speculative stories as fact. That's why I've become a lot more cautious about freaking about something until I actually read the stories that many of these OPs are linked to.

[Newest Reality]

17. Why not?

That would seem to be more realistic and transparent, at least.

While some may argue the point, we appear to have a government that is largely controlled by special interests with plenty of clout, lobbyists and officials in their pockets. I mean, that has become so obvious that seems to be no longer a matter of conjecture.

The result of a corporatist-leaning, (perhaps to become official someday) government is corporatism. The statistics about the distribution of wealth in this country, and as compared to others, indicates where our wealth and power, (collectively and individually) are going.

While the corporate media can bark and howl and distract those who are not curious, questioning and critical, it is not able to completely obscure the extremely critical nature of our predicament.

What we do and don't do may matter now more than it ever has during the course of our lives.

[WillyT]

18. + 1,000,000,000... What You Said !!!

Exactly!!!

:hi:

:kick:

[Kaleko]

35. "What we do and don't do may matter now more than it ever has..."

There's a chance that enough people will wake up due to the fact that their nightmare has been made unbearable, that it will tip the scales from a mass of unconscious sheep bleating the propaganda they've been fed to alert observers who will stand up collectively and make themselves heard.

A slight chance at the very least...

[The Velveteen Ocelot]

Quis custodiet ipsos custodes?

Looks like nobody.

[Fuddnik]

20. I thought they already had them.

Something about voluntary regulations.

[Blue_Tires]

22. At least they are dropping the pretense now...

Everyone knows how buddy-buddy they all are, and how many are on that revolving carousel of law firm-justice department-board of directors-lobbyist-law firm...

[frebrd]

24. Well, there's that "change" thing again!

Truly, capitalism run amok.

[Rex]

26. I guess America wasn't falling apart fast enough for them?

If they do this, there will be no such thing as a 'free market' system. It will be Robber Barons stealing from smaller Robeer Barons with the taxpayer footing all the costs in the end. When they kill our very ill and weak economy.

[Ignis]

27. K&R. Not with a bang, but a whimper.

:(

[Tierra_y_Libertad]

28. Kinda like putting the CIA in charge of torture investigations.

[Ruby the Liberal]

31. As someone who is licensed through FINRA for work, I think this is a VERY bad idea

NASD/FINRA likes to think that they catch violations before the SEC due to their random auditing capability, manpower and resources, but their fines are WAY less severe than the SEC imposes. That, and the SEC has regulatory authority to involve the FBI for violation prosecution. FINRA has no such teeth. Today, the federal government is the prosecution arm of a joint SEC/FBI investigation. FINRA? Who knows.

Bad, bad idea.

[WillyT]

33. Thank You For Your Insights !!!

:yourock:

:hi:

[Ruby the Liberal]

36. Happy to help, Willy

FINRA is not a bad thing. I for one am GLAD they are there to set standards of conduct and compliance in the industry. The SEC is simply stretched too thin to do that.

This, however, is a massive overstep of their (FINRA's) role, IMO. I would *love* to hear from someone there as to what prosecutorial methods they would deploy to replace the SEC. Right now, they are limited to censuring someone from the industry (pulling their license for a period of time or permanently) and referring criminal cases to the SEC.

They are a transparent organization though, which is good. You can go to www.finra.org and look up any broker in the industry and see their U-4 filing information as well as continuing ed and any complaints or violations filed. Anyone with a license to do financial advice or broker in the market will have a record on the site and it is permanent. Mine goes back to 1992, which was 4 jobs ago, 3 of which were not even in the industry.

[Ruby the Liberal]

37. And another thing

Hedge fund and private equity managers do not have to register with FINRA. Because they are restricted to only doing business with "qualified individuals" (those with $1mm+ in liquid investable assets who make $200k+ annually for the last 3 years running) and are thus assumed to be "investment savvy", they are exempt.

This means that these fund managers ARE under SEC regulations, but not FINRA rules or registration.

If I really thought about it, I could probably come up with another dozen of so reasons as to why this is a bad idea.

[woo me with science]

68. Thank you. nt

[Octafish]

34. Helps explain the widespread opposition to Elizabeth Warren.

Now we can continue our path to prosperity for the wealthy by further socializing the risk and privatizing the reward. Hoorah.

[TNLib]

39. Ugh if that happens I am defiantly going to stop my investments.

How can any investor have confidence in the market with all the bullshit going on?

[Capitalocracy]

77. You really shouldn't have confidence in the market.

The market is designed to take all your money. Not that you can't make money investing, but unfortunately, I don't know if you can trust professional financial advisers or investment ratings. And doing it yourself isn't that easy either.

Just don't gamble more than you can lose.

[ProSense]

40. "Congress is considering the move as a cheaper alternative..."

Shouldn't that raise a red flag?

From HuffPo:

<...>

Two and a half years after the worst financial crisis since the Depression, Washington lawmakers are focused on cutting funding from the government's oversight of the financial industry, even before last summer's Dodd-Frank law is fully implemented. House Republicans support a measure to flat-fund the Securities and Exchange Commission, to deny it resources that Democrats and SEC officials say are crucial to the protection of investors and the policing of financial crimes.

<...>

Despite the long and convoluted Bloomberg piece, this is something House Republicans are trying to do.

[Ilsa]

43. Oh this is just fucking great. What are we supposed to do with

our IRAs now? The investment forms will all go broke without regulation. I don't want to cash out my IRA, I don't want to pay taxes on it yet, but I need a qualified fund to part my money in. Any ideas? (Less than 6 figures.)

[Ruby the Liberal]

101. Some ideas

1. Move the funds through a 1035 transfer to an annuity. That was you can still invest, but have insurance protection on the balance.

2. Have your broker transfer to an FDIC insured product, such as a money market or CD. NO interest to be found, but protection of principal.

Neither option would require you to liquidate the fund and take the tax hit.

[chill_wind]

47. And Neil Barosky has finally defected.

To spend more time with his family. If he couldn't stomach it any longer to stay around and continue to try to help clean it up, there's probably no one that will. That would get past the gatekeepers.

http://en.wikipedia.org/wiki/Neil_Barofsky

[cui bono]

49. ...

[WinkyDink]

53. Fox, meet hen-house.

[russspeakeasy]

64. More like...hen, meet fox house.

[somone]

54. Another change we've been waiting for

[antigop]

59. "The price could be paid by investors." --- oh, what a true statement n/t

[russspeakeasy]

62. How much further to the bottom?

[PotatoChip]

70. Ridiculous and Infuriating nt.

[Jakes Progress]

72. Ahhhhh. The plan comes together. grover is happy.

[ut oh]

75. For the GOP, the Fox guarding the hen house is

absolutely acceptable and the RIGHT thing to do. If we lose a few chickens... meh.... as long as the Foxes are happy....

[Capitalocracy]

76. They're using expanded definitions of "investment adviser" as an excuse for this

I'm a transcriptionist, which means I get to be a fly on the wall for some interesting stuff sometimes... including financial institution teleconference calls. They're counting on the current trend of cutting government spending to undercut Dodd-Frank expansion of the definition of financial advisers that have to register with the SEC, giving them rules they have to follow about conflicts of interest and accountability in their investment advice.

People in finance have an extreme aversion to real oversight and a frightening sense of entitlement. They're literally saying things like all we do is give people advice on how to invest their money, we shouldn't have to register as financial advisers!

[wysimdnwyg]

78. Business as usual

[FiveGoodMen]

80. In a related note, accused criminals will henceforth act as their own judges.

[florida08]

91. less government more corporatism

Looks like Norquist is getting his wish. Drowning oversight in the bathtub, Rob and pillage boys:argh:

[McCamy Taylor]

92. Tea Baggers came to DC vowing to cut funding to federal regulatory agencies.

[McCamy Taylor]

94. Did anyone read the article above? 20 posters blame Obama---and yet Congress is the one doing it.

Only two posters (me and Prosense) bothered to read the article, apparently. Everyone else just jumped on the bandwagon.

The person who posted this thread is partially to blame for not making it clear that Congress is trying to cut funding to the SEC. As written it suggests that the SEC (under Obama) wants to give up.

[CrossChris]

96. Is the New Deal not on the chopping block for the President as well?

His actions have certainly suggested that that's a valid tangent to this discussion.

[Doctor_J]

100. Do you think he will veto it, or speak strongly against putting the foxes

in charge of the hen house?

[Xicano]

97. K&R

[femrap]

98. We are Greece! nt

[DesertDiamond]

99. They'd be regulating THEMSELVES???? Yeah, that'll work.