It will be interesting to see if both parties can support bringing the CFPB within a Constitutional structure. For the Democrats, who had previously supported a CFPB unfettered by Presidential or Congressional restraints, the idea of imposing Congressional budgetary control (now that the CFPB is no longer directed by a Democrat-appointee) may have some appeal, particularly given the possibility they may gain more control in Congress.

FINRA should not address the issue of unpaid arbitration awards through an expansion of SIPC insurance. That fund is intended solely to remediate custodial claims. If it is turned into a general antifraud insurance fund, not only will the costs of maintaining the fund balloon, but those costs will be borne by firms and their customers who have nothing to do with generating them and exert no control over them.

This is a very significant request for comments.  While the request is seemingly focused on governments (FINRA should also make a broad study of the applicability of its rules to transactions in municipals), that focus may not be the most significant aspect of the request.  Firms should be particularly mindful of the significance of the request for comments that is directed at debt securities generally.  Depending on how FINRA (and the SEC) ultimately determine that its rules…

The custody rule is arguably the single most important regulation governing broker-dealers. Both the SEC and FINRA are rightfully focused upon it. Firms should review the various infractions cited in the enforcement action and determine that none of these is applicable to them. Beyond that, the regular audit of their custody functions is one that firms should take very seriously. The regulators will. And it is good public policy.