Following up on one of my previous posts:

The SEC just put on the table a new rule regarding the financial sector. If passed, it will limit the ability of financial firms, or third party hedge funds, to short investment products sold to the firm’s clients. This comes tumbling in four years after Goldman & Paulson’s CDO fiasco.

This new proposed law seems to be too blunt. Like the Dodd-Frank bill, this leaves people wondering how the implementation will work (and if it’s just another jobs bill).

While the industry is arguing that this may hurt competition and the recovery of the securities market, I think this is great for the industry. At the heart of this bill, if sharpened a little to not be so all-encompassing, is a boost for investor confidence. I’ve spoken to people in sales/representative roles who say ordinary ‘investor’ confidence is so low that most people are scared to even talk about their money let alone invest it. That, coupled with low financial literacy and all the negative news as of late, is scaring away clients and potential capital.

This bill I would say, rather than weakening the financial recovery, should act to strengthen it.

But it will be interesting to see if, when, and in what form this bill will be passed in the face of strong opposition from lobbies.

http://www.reuters.com/article/2011/09/19/us-financial-regulation-sec-idUSTRE78I2SK20110919