More On Legal & Compliancefrom The Advisor's Professional Library
- Risk-Based Oversight of Investment Advisors Even if the SEC had a larger budget and more resources, it is doubtful that the Commission would have the resources to regularly examine all RIAs. Therefore, the SEC is likely to continue relying on risk-based oversight to fulfill its mission of protecting investors.
- Privacy Policies and Rules Whether an RIA is SEC or state-registered, the firm must have policies and procedures in effect to protect clients privacy. Policies and procedures should explicitly require an RIA to send out its privacy notice each year.
In an op-ed article in the Wall Street Journal on March 23 , and in a release on the morning of the 23d , Treasury Secretary Timothy Geithner provided details on the Government's plan to set up a new bank that will buy the toxic loans that "currently burden the financial system." Called the Public-Private Investment Program, the new bank will use from $500 billion to $1 trillion in financing, which Geithner said in his op-ed would account for a "substantial share of real-estate related assets originated before the recession that are now clogging our financial system."
The new bank will use government funds from Treasury, the Fed, and the FDIC, Geithner wrote, to entice private investors such as pension funds to purchase loans from banks and "securities from the broader markets." The risk of the new bank will thus be borne by the government and private investors, and those private-sector investors will set the price for those loans and other "legacy assets" that commercial banks will want to sell to get them off their balance sheets.
Geithner writes that the intent of the plan is this: "Over time, by providing a market for these assets that does not now exist, this program will help improve asset values, increase lending capacity by banks, and reduce uncertainty about the scale of losses on bank balance sheets. The ability to sell assets to this fund will make it easier for banks to raise private capital, which will accelerate their ability to replace the capital investments provided by the Treasury."
Geithner is scheduled to testify this week before Rep. Barney Frank's House Financial Services Committee on the 24th; President Obama will hold a prime-time press conference at 8:00 PM Eastern time that same evening.