FDR’s Wall Street watchdog: Why the SEC’s role remains vital nearly 90 years on

Core Insights - The Great Depression revealed the flaws in the economic model of the Roaring 20s, emphasizing the need for regulation to ensure fair opportunities for all [1] - FDR established the SEC in 1934 as a regulatory body to reform Wall Street, allowing average Americans to benefit from capitalism [2] - Historical challenges to the SEC's authority and effectiveness have persisted, including periods of deregulation that led to significant financial crises [3][4][5] Regulatory Evolution - The SEC was temporarily relocated to Philadelphia in 1942, which hindered its effectiveness until it returned to Washington in 1948 [3] - The 1960s saw a surge in Wall Street activity and fraud, overwhelming the SEC's resources and leading to major market manipulation issues [4] - Deregulatory policies in the 1980s, including the decision to let the CFTC regulate derivatives, contributed to significant market failures and investor losses [4] Recent Developments - The Commodities Futures Modernization Act of 2000 prohibited regulation of 'swaps', which contributed to the Global Financial Crisis in 2008 [5] - By late 2022, the lack of regulatory oversight on cryptocurrencies resulted in widespread bankruptcies and fraud [5] - The SEC is currently moving towards a more laissez-faire approach under recent proposals, which raises concerns about the potential for unchecked speculation [6][8] Historical Context - FDR's vision of a regulated financial environment remains relevant, as the SEC has been a work in progress for nearly 90 years, facing numerous challenges [7] - The importance of maintaining regulatory oversight is underscored by historical lessons, emphasizing the risks of forgetting past mistakes [7]