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July 11, 2003

GOP Federalism Hypocrisy- Screwing Investors

With a name like the Securities Fraud Deterrence and Investor Restitution Act of 2003, given the Orwellian labelling of bills by the GOP, you know this bill approved by a House panel is bad news.

But the federalism hypocrisy of the GOP just marches on with this bill. The core of the bill is that the Securities and Exchange Commission, rather than possessing concurrent enforcement powers with states to defend consumers from fraud, would now have monopoly rulemaking power. Essentially, if the Bush administration wants to leave an Enron alone, the states would essentially be powerless to defend against fraud.

Worse, what it also says is that if Wall Street passes a rule policing itself through the New York Stock Exchange, no state can enforce a tougher rule on behalf of consumer protection.

Read that sentence again. Whatever regulation Wall Street wants for itself, even if the SEC doesn't have a rule on the issue, would bar the states from an alternative regulation.

The outrageousness of this bill is hard to believe, but par for the course at this point.

Posted by Nathan at July 11, 2003 09:53 AM