Mr. Behnam is right, of course, in predicting that something bad will eventually happen. More difficult is predicting what specific bad thing might happen and proposing rules that are reasonably tailored to prevent or deal with it. The alternative is to propose rules that don't prevent problems, to have problems in spite of those ineffectual rules, and then to "find" that government wasn't "tough enough" and so to adopt more expensive and futile rules. Put differently, the question is not,…

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…