SCHAPIRO CALLS FOR NEW FINANCIAL REGULATORY SYSTEM
In a recent speech, FINRA CEO Mary Schapiro called for sweeping changes in the financial regulatory infrastructure in response to recent financial events. She laid out a 5-point plan: (1) a focus on systemic risk similar to insurance and banking regulation with an emphasis on solvency; (2) establishing objective criteria for government intervention for those entities deemed to big/important to fail; (3) a extending comparable regulatory protection to consumers regardless of the product purchased; (4) limiting new product innovation in order to protect investors; and (5) regulating previously unregulated markets (e.g. credit default swaps).
OUR TAKE: It seems that Ms. Schapiro is advocating the Paulson plan, which calls for entity regulation rather than product/activity/transaction regulation. Will this mean the end of FINRA and the SEC in favor of a new super-regulator?