Investor Confusion - Who is to Blame?

Yesterday I wrote agreeing with the House Republican letter stating, among other things, that fiduciary regulation should not add to investor confusion.  I also wrote about the myriad of overlapping, inconsistent, technical, and detailed regulation that creates that confusion.

Ultimate responsibility for the regulatory morass, though, lies with Congress.  Back in 2009 Congress, as a result of the financial crisis, could no longer ignore the need for regulatory reform.  There was hope that the structure of the regulatory system could be streamlined to accomplish more, decrease the problems that fell between the 'cracks' of the agencies' boundaries, and ensure responsibility for regulatory failures could be established.  I wrote at the time of the oddity that the same investment products and advisers are regulated by different agencies depending on whether the money being invested happens to be in a 401k vs a 'regular' account.  http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1331042   That paper is now dated because Congress failed to address that problem, as part of its failure to stand up to the self-interest of the individual agencies and engage in significant structural reform.

So, yes, House Republicans identify an important concern when they write about investor confusion.  But, Congress passes the buck down the chain when it gives multiple agencies regulatory responsibility over different bits and pieces of the financial services industry and then complains when the agencies attempt to do the impossible job they have been given.