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Was FINRA Asleep with Subprime?

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Jan 17, 2008 4:51 pm

Here are two paragraphs in my just released comment that seem to have touched a lot of nerves:

  But you still have one more task. You need to also look within your own ranks and ask how FINRA (and the states and the SEC) missed all the red flags and warnings that the subprime excesses were baking into Wall Street. You get the regular reports of every firm's capital position. You know the assets and liabilities reported by your members, and you knew how large those subprime positions were. Frankly, you should have become far more concerned and far sooner about the valuation of those subprime assets.

It's time that the question is put to you: How did your vaunted systems fail to detect the growing cancer and spreading infection? Were you all too involved in the NYSE/NASD merger to notice? Have you been chasing the mice for so long that you failed to see the looming elephant?
  For the full Blog, please visit
Jan 18, 2008 1:01 am

Yeah, baby, yeah!!!

Jan 18, 2008 2:01 pm

Jan 18, 2008 5:30 pm

[quote=rrbdlawyer] _popupControl(); Sorry to split hairs, Joe, but I don’t agree.  It’s not that they were merely asleep.  No, I think it’s more sinister.  I think they were in bed with them, to some extent.  Take a look at my follow up posting on this forum and you’ll see that the larger firms (many who brought us this subprime mess) still get off with relative slap on the hands for violations that an individual RR or smaller firm would get slammed for.

  I mean, geez, what the hell do they really think -- that we're all stupid?  FINRA, the states, the SEC all get access to FOCUS reports and they all throw their weight around when it comes time to conduct a routine or cause examination.  We all know the enemas they give smaller firms when it comes to demands for books and records.  Did none of those bullies even notice the growing presence of subprime assets on the books of larger BDs?  Did none of them see the red flags that those assets were being priced on less than rigorous bases?  Did none of the examiners wonder whether the packaging of those shaky products into mutual fund holdings would have any negative effect?   Gimme a break!  I remember the venom with which the regulators went after pennstock hucksters and boilerroom operators and the SOES-bandits.  Isn't it amazing that the same energy never bubbled to surface when this subprime meltdown started to rear its ugly head.  I don't think it's because the regulators lacked either the tools or the manpower.  I think the answer is far more sinister and dishearteninig.  [/quote]   It's more akin to the u.s. gov't protecting big oil.  Same thing.  They are all in bed together.