Wall Street may be great at many things, like making money (however they manage to make it,) but they stink at one thing: regulating themselves. Amid all the things that need to be fixed about the financial industry that we’ve focused on this week, we’ve neglected to mention the issue of self-regulation.
Our colleague Kristen McNamara filed this snippet earlier this afternoon that corrects that oversight:
Congressional efforts to reform the financial regulatory system haven’t adequately addressed the failures of self-regulatory organizations charged with protecting investors and maintaining financial market integrity, the Project On Government Oversight, a nonprofit government watchdog, wrote in a letter to Congressional leaders.
The group urged Congress to take a closer look at the Financial Industry Regulatory Authority, which oversees the securities industry
The watchdog says Finra failed to prevent scandals, including the fraud committed by Bernard Madoff and Allen Stanford, due to its close relationship with the securities industry. Congress should consider curtailing the power of SROs in favor of independent regulation, the group wrote.