Government Watchdog Warns Against Oversight Agency Expansion
The Project on Government Oversight today sent a stark warning to Congress: Don’t let the commercials paid for by the Financial Industry Regulatory Authority
Jul 31, 20206.2K Shares892.6K Views
The Project on Government Oversight today sent a stark warning to Congress: Don’t let the commercials paid for by the Financial Industry Regulatory Authority (FINRA) fool you, because they’re the last people to whom you want to give expanded regulatory authority. According to POGO, FINRA’s incompetence or deliberate unwillingness to provide oversight of the securities industry added to the current financial crisis and nearly every major securities scandal since the 1980s.
According to Andy Kroll at Mother Jones, FINRA is a private regulator within the industry charged with protecting consumers, but since it is often staffed with industry insiders and funded by the industry, it hardly does the job it’s intended to do. If it seems like there’s a conflict of interest in letting an industry group protect the consumers the industry might be able to make more money defrauding, POGO says that’s exactly the problem.
“„As POGO wrote in its letter to Congress, “the cozy relationship between FINRA and the securities industry has resulted in pervasive conflicts of interest, and ought to raise doubts about whether FINRA can ever be an effective regulator.”
Not that doubts about its conflicts of interest stopped President Obama from nominating its immediate past chair to run the Securities and Exchange Commission; once there, Mary Schapiro directed the staff to come to the now-infamous settlement with Bank of America over its failure to disclose the Merrill Lynch bonuses.
Other examples of FINRA’s ineffectiveness as a regulator abound: From missing the Madoff and Stanford Ponzi schemes to taking a hit to its own investment portfolio of half a billion dollars and then awarding its executives $30 million on bonuses, FINRA is often a reflection of the very self-governance problems in the financial services industry that are at the root of the call for further regulation.
Now FINRA is [calling on the government](http://motherjones.com/mojo/2010/02/watchdog-blasts-private-financial-regulators?utm_source=twitterfeed&utm_medium=twitter&utm_campaign=Feed%3A+Motherjones%2Fmojoblog+(MotherJones.com+|+MoJoBlog)) to give it the authority to police investment advisers in addition to securities brokers, despite its track record of protecting the industry’s interests first and consumers’ interests second (if at all). The folks at POGO hope that Congress’ intention to pursue some sort of new consumer regulation doesn’t end up being an opportunity to outsource henhouse protection to the foxes already bedeviling it.
Hajra Shannon
Reviewer
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