10% of all US stock trades no longer happen on public, regulated stock exchanges; that’s 10%, trading in “stealth exchanges,” unregulated. Think about it.

WaPo has a great article about the Pecora Commission today. In it there is speculation about where this generation’s answer to Ferdinand Pecora will come from.

One possibility is that such a character could come out of the 10-member Financial Crisis Inquiry Commission, which was set up by Congress in July to investigate various aspects of the current crisis.

The Pecora Commission report devotes a substantial amount of pages to discussion of the evils of allowing the commingling of commercial banking services, investment services and Commercial banking services all in one house.

One of the great “evils” identified by the Pecora Commission was “short” selling. In many instances, when you open a brokerage account with a major firm, there is a clause in your client agreement which allows the firm to “borrow” stocks and other securities from your account. The firm then lends you stock to another customer who “sells” you stock to a third person.

Tucked into the Fraud Enforcement and Recovery Act of 2009 [FERA], which was signed into law on May 20th, is a provision for a “Financial Markets Commission”. See, S. 386 at section 5. This is essentially a new Pecora Commission.

Is Nancy Pelosi right? Do we need a new Pecora Commission? After all we have the rules and regulations of the stock exchanges, we have the SEC, we have FINRA (formerly NASD for old folks like me), we have the FDIC and the Federal Reserve. Isn’t that enough oversight?

Maybe not. If those institutions were functioning as they should; if they had teeth and their people had a driving sense of mission,

For those of you who don’t work on Wall Street, I thought it might be useful to define some terms that you may be reading or hearing in the news media, that might be used during testimony before a Congressional Banking Committee, and which will undoubtedly be used if a new Pecora Commission is constituted.