Where's SEC and Congress?

 

Much like the popular game ‘Where’s Waldo?’ Where the goal is to find a certain man in a busy picture full of people, which can be difficult because he is well hidden…the SEC and Congress also seem to be well hidden and difficult to find. While there’s a high level of uncertainty surrounding the market, there also seems to be a free for all happening, where certain individuals or entities trading this market have carte blanc to do whatever they want. It’s time to step up to bring back sanity and a level playing field to the market.

 

 

The Uptick rule, the easiest and most obvious fix, still has not been reinstated. For those not familiar with the Uptick rule, this is a securities trading rule used to regulate short selling in financial markets. The rule required that every short sale be entered at a price higher than that of the previous trade. It aimed to prevent short sellers, who make money when stocks fall, from adding to the downward pressure of a falling stock. In 1938, the SEC adopted the uptick rule, after conducting an inquiry into the effects of concentrated short selling during the market break of 1937. On July 6th 2007, the rule was eliminated.

 

 

The Glass-Steagall Act of 1933, officially named the Banking Act of 1933, introduced the separation of bank types according to their business (commercial and investment banking), which prohibited commercial banks and securities firms from operating under a single roof. It also founded the Federal Deposit Insurance Corporation for insuring bank deposits. In 1999 the Act was repealed.

 

 

Both of these regulations were implemented after one of the worst times in the financial history of our country, (don’t make me say the “D” word), and for very good reason.

 

 

FASB 157 (Mark-to-market) or fair value accounting- refers to the accounting standards of assigning a value to a position held in a financial instrument based on the current fair market price for the instrument or similar instruments. In a normal environment mark- to-market works seamlessly. But this isn’t a normal environment. Why not temporarily suspend mark- to-market? Apply it only to derivatives, cdo’s and other toxic investments so they can be priced fairly?

 

 

Now there are those opponents who say we don’t need these regulations. “Really” For 70 some odd years they’ve been a check and balance to the financial system, so isn’t it ironic that when these regulations are eliminated it takes less than nine years to create chaos and devastation to our financial system. FYI, in case you haven’t noticed while you’ve been hiding Wall Street is burning.

 

 

Some sound and prudent regulations are necessary just as laws are. SEC and Congress, come out of hiding, do your job and make some decisions. What are you guys waiting for?

 

 

“Those who don’t know history are destined to repeat it”.

 

Written by Thomas G. Chipain

 

President, Investment Advisor

 

ReviewMy401k.com LLC & T.G. Chipain Financial Group LLC

 

Source: Definitions; Wikipedia

 

Quote: Edmund Burke