Taxpayers have been waiting since 2008 for the SEC to take action to prevent a repeat scenario of the worst economic crisis since the Great Depression.
But the Financial Stability Oversight Council (FSOC) keeps gumming up the process according to prominent SEC alumni. Many have written letters to the FSOC to stay out of the way. That still doesn’t seem to motivate the SEC to actually act.
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If the SEC wants to keep other regulators from taking over problems created by SEC regulations, the SEC needs to step in and fix them itself.
When the 2008 crisis hit, it became obvious that money funds whose values were thought to be stabile actually were not so.
Judgments of credit ratings companies were not so reliable, either. Yet four years out, the SEC still has not fixed either problem.
It’s difficult for taxpayers to understand why. Time can work wonders, however, and now, the two hold-out commissioners have said they are willing to support accurate prices instead of holding to the $1 NAV.
The letter-writing alumni say the SEC would do a better job of fixing these issues
than the bank regulators on the FSOC. That is, if the SEC will actually act on them.
Of course, the entire financial industry has input on proposed SEC rules. Perhaps a better balance needs to be struck between what's good for the industry and what's good for the investing public.