The Blog Of The Securities Industry Professional Association

Should We Be Bailing Out Only The Elite Firms?

Now is the time to act if you’re a Brokerage firm or Financial professional in America. We would like to hear your thoughts and opinions and present them to the House Banking Committee. Wall Street’s elite firms have run aground and now the Federal Government wants to bail them out. For many years, many have felt that Regulation was driving small firms out of business and there is an overwhelming amount of evidence hat indicates this may be true. However the government’s bailout plan does nothing to stop the abuses of these large Elite firms. In addition, the government’s plan does nothing to increase CAPITAL FORMATION in America. Issuers have complained loud and clear that the likes of Merrill, Goldman and Lehman won’t even talk to them unless they are raising 200 million or more. In addition, small firms have complained that the cost of SARBOX along with FINRA compliance has made it nearly impossible to raise money for smaller issuers. The Government bailout does nothing to help raise capital in this country and get our economy moving.

We have also heard many concerned voices from small and mid sized firms who are upset at the fact that it was hard enough to compete with these large Wall Street firms before , but now that for all intent and purposes, they are owned and backed by the Federal Government, it will be impossible to compete fairly.

Lastly, we have heard from many small firm owners who are calling for the release of funds from FINRA due to the fact that the large firms are getting government bail outs. Indeed, it’s estimated that FINRA, the regulatory body of the securities industry, is sitting on $1.5 BILLION in cash, (hopefully not in a reserve money market!), money that belongs to members. It has been suggested that the federal government order FINRA to release to all firms immediately and equal share of that surplus in order to help small firms help rebuild capital formation and grow the economy. That would amount to over 300K per firm! Firms throughout the country could use that money to hire more brokers, invest in better software and marketing and even hire more compliance officers to ensure the mistakes of Wall Street do not repeat. In addition, at a time when Americans have lost confidence in our markets and the stability of the Brokerage firms, that money could be used to infuse a ton of extra net capital into firms across the country.

The time to voice your opinion is now.

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September 25th, 2008



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