I'm reading through the message points that the Financial Services Institute has sent out to its members and after every sentence or two, I have to fight my gag reflex. For instance: "Dodd-Frank called for changes in the oversight of investment advisors and broker-dealers in order to eliminate regulatory gaps that undermine investor protections." The message says that these investor protections will be restored with the legislation cosponsored by Reps. Spencer Bachus (R-Ala.) and Carolyn Maloney (D-N.Y.) that recommends more stringent oversight of registered investment advisors under FINRA.

This is a deliberate attempt to obscure the fact that the Dodd-Frank measure was passed, not because of anything that mainstream (dually registered or otherwise) RIAs did, but because an outraged public wanted more oversight over an entirely different group of "advisors." The brokerage community had just brought the global economic system to the brink of collapse with its reckless sale of junk mortgage pools and derivative bets on them. The "regulatory gaps" the bill is addressing had nothing to do with RIAs; it was the fact that somehow the wirehouse community had been able to rake in billions while their investors suffered, and then demand taxpayer-sponsored bailouts when their own balance sheets were threatened.

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