The Alliance for Economic Stability (“AES”) today released publicly a letter to the Financial Crisis Inquiry Commission (“FCIC”), a body set up by the U.S. Congress to investigate the causes of the financial crisis, urging an investigation of FINRA, a self-regulatory organization.
The letter states that the AES hopes the FCIC will thoroughly investigate the responsibilities and failures of FINRA in allowing the practices that were the most direct cause of the financial crisis. Little known to most Americans, FINRA is the nation’s largest financial regulator and the organization with the most direct day-to-day oversight of financial firms. However, FINRA has garnered no visible attention from legislators and other government officials as they consider changes to the financial regulatory system. Most recently, FINRA has evaded scrutiny for having failed to uncover the Lehman Brothers Repo 105 program. FINRA's most direct and specific responsibility is to supervise a firm's compliance with capital requirements. FINRA failed not just in Lehman, but Bear Stearns and AIG as well, yet has not been the subject of any investigative action. Meanwhile FINRA executives use court-granted immunity and a lack of oversight to enrich themselves, making fortunes as what can only be described as "rogue cops." FINRA is the only private organization of its kind in the world. The AES is urging an investigation of FINRA’s responsibilities in the financial crisis as part of the larger effort of the AES to advocate responsible economic and financial regulatory policy to ensure the safety of Americans’ savings. The letter to the FCIC and an AES report on FINRA can be accessed at the AES websites: www.eally.org or www.eallies.org. About the Alliance for Economic Stability: Alliance for Economic Stability is a non-partisan economic policy organization. The purpose of the AES is to encourage policies that protect savings and investments, and promote a fair financial marketplace.