Representative Barney Frank will be retiring from Congress at the end of 2012, but he's not getting out of politics.  In part, he wants to spend more time defending his namesake financial reform law - Dodd-Frank Wall Street Reform Act.  Until then, he continues to resist efforts by Republicans to enact legislation that respond to Dodd-Frank, but not in a way he likes. A proposal was introduced in September by Spencer Bachas (R-AL), who chairs the House Financial Services Committee, to establish one or more SROs for overseeing investment advisers.  Frank, highest-ranking Democrat on the committee, resists that idea, saying:  "I'm skeptical of self-regulatory agencies.  I would not want to detract at all from the responsibilities of public agencies." It's not clear when a formal bill will be introduced.  However, the drafted version takes into consideration SEC three recommendations for the SEC to increase the scope of investment adviser exams.

1. allow the SEC to charge user fees for exams;
2. establish an SRO to regulate advisers;
3. expand the reach of FINRA to include advisers who are dually registered as brokers.

[C-I Note: Last we heard, FINRA was an SRO, or self-regulatory organization.  Might they not fit recommendation #2 - although they wouldn't need to be established.]

Each options requires congressional authorization.  The Republicans generally favor an SRO because they are not convinced the SEC can adequately regulate advisers. - something about missing Bernie Madoff's Ponzi scheme.  They also don't appreciate the fact that the SEC has the resources to review only about 8% of some 12,000 RIAs annually. Barney Frank counters by saying the SEC should receive increased funding, that's called for in the Dodd-Frank law.  “Give the public agencies enough money.” Republicans Control Timing and Vote. Under House rules, the majority party - in this case, the GOP - has almost complete control - to promote a bill according to its own timeframe, and to it passed.   Nonetheless, a united front by Democrats can signal to the Senate which way the Senate should move on such a bill. That's why Mr. Frank likely will continue to have influence until his final day in office. He is acknowledged by Democrats and Republicans as a consummate legislator who knows where the pressure points are for Republicans, his caucus and Wall Street.  And Congressman Frank will remain on the Hill for the next 13 months of his congressional career and will to continue to exert an influence - even after he's left - if at all possible.  Getting a deal done will require bi-partisanship Most importantly, Barney Frank wants to concentrate on stopping Republicans from dismantling Dodd-Frank.  He said the biggest threat is the election of a GOP president whose appointed regulators would want to scuttle the law.  But if most of it can be implemented in the next year, he believes Dodd-Frank will be preserved.  “The best time to strangle something is at the beginning,” Mr. Frank said. “Financial reform is popular.” [C-I Note: It still makes the most sense to pass the RIA oversight function, for the most part, to FINRA.  They have the infrastructure, examination and review process, and enough dual-registered entities already reporting to them to facilitate a transition.  It will be ridiculous if much more time is wasted and the end result is that FINRA is the last one standing.  We guess Washington has to go through the motions, no matter what.] Investment News, 11/30/11]