Bachus Urges FINRA Oversight of FAs

WASHINGTON - Republican members of the House Financial Services Committee said that they are generally opposed to the four muni bills the committee is considering at a hearing this morning.

Ranking Republican member Rep. Spencer Bachus of Alabama, whose district includes Jefferson County, said in opening remarks that the bill that would require all muni financial advisers to register with the Securities and Exchange Commission is the only one of the four that he could support, albeit with some changes.

In light of the SEC's failure to discover the Bernie Madoff ponzi scheme, Bachus said the Financial Industry Regulatory Authority, and not the SEC, should be given oversight of FAs.

Bachus also said he will soon introduce legislation to give the SEC "real authority to oversee the municipal securities market," suggesting he would propose a repeal of the Tower Amendment that was added in 1975 to the Securities Exchange Act of 1934 that prevents the SEC from directly regulating muni issuers. 

Committee chairman Rep. Barney Frank, D-Mass., said that federal intervention is needed because issuers are paying unduly high interest rates considering their bonds rarely default.

He also repeated a pithy one-liner from a muni hearing last year in which quipped that buying insurance of munis, particularly general obligation debt, is like buying life insurance on a vampire, because it is "insuring against events that never happen."

The bills propose a liquidity facility for variable rate demand notes, a reinsurance program, SEC registration of FAs and uniform credit rating agency ratings.

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