The U.S. Treasury Secretary announced the second stage of its “capital markets competitiveness plan” devoted to efforts to “modernize the structure” of the regulatory system for all U.S. financial services providers. The announcement was made before the New York Stock Exchange’s conference on deals and deal-making, hosted by the Wall Street Journal.
As the securities industry is rapidly being globalized, Wall Street insists it can not compete with loose regulations elsewhere in the world unless U.S. standards for reporting, fraud and other wrongdoing are relaxed. Frenzied cries to federal and state officials hype this theme as if the “sky is falling.” Meanwhile, Republicans and Democrats, including candidates for both state and federal office, are taking the bait. Or, perhaps, these candidates know that many of the largest campaign donors around are found on Wall Street.
The fear mongering about losing the battle for listing shares has even invaded the courts as observers, including the SEC, lobby even the U.S. Supreme Court, stating that our nation is on the brink of disaster since it can not compete with foreign markets with almost no oversight.
Thus, U.S. must join in a “race to the bottom” in order to provide aide and comfort to crooks and would be crooks in corporate and investment banking circles. Notwithstanding all the scandals on Wall Street in the past few years, and while record profits are being earned by the perpetrators, there is a fear that there is just too darn much regulation here for honest folks to survive!
The strictest securities regulation in history began in the U.S. about seventy-five years ago. This was just after the stock market crash of 1929, which sent this country into a tailspin followed by the depression years of the 1930’s. Since that time, and under those regulations, the U.S. economy and capital markets have boomed and become the envy of the world. Yet, to listen to Wall Street’s “Chicken Littles,” such regulation will soon be our downfall.
The conventional wisdom has been that investors prefer investing their money into companies and markets which are overseen by watchdogs. Make sense? The new un-conventional theory is that lawless oversees markets will rob the U.S. of its financial markets. While investors scratch their heads at this, perhaps we should explore another motive: If we remove more restrictions on Wall Street, it can get away with murder, instead of simply being exempt from highway robbery (except for token fines).
The Treasury Secretary states “To maintain our capital markets’ leadership, we need a modern regulatory structure complemented by market leaders embracing best practices.” (That’s code for “the heck with investors, we represent Wall Street’s interests.”) Meanwhile, Under Secretary Robert Steel admitted that the Treasury would capitalize on its “great relationships with industry people” and “invite input from others to ensure that there is consultation and discussion from outside Treasury on the initiative … I’m optimistic that people will reach out to us so we’ll have the right dialogue,” he said.
We note how well utility deregulation fared after input from Enron and others became policy. So, as many Americans cry out to have laws enforced to throw the poor out of our country, perhaps the investing public should also demand that laws be maintained and enforced to prevent multi-billionaire firms from continuing to rob them blind.
By: William S Shepherd
William Shepherd is the founder of the law firm of Shepherd Smith and Edwards a securities law firm that represents investors seeking recovery of losses in their accounts at investment firms. If you or someone you know has suffered investment losses, contact Shepherd Smith and Edwards today.