Investors still need SEC in traditional role of watchdog

Investors can't always count on banking regulators to do the right thing by them. Sometimes regulators sacrifice the needs of investors for what passes as the greater financial good.

That sure appeared to be the case last year. Regulators led IndyMac Bancorp Inc and other thrifts to file misleading reports about their capital, and the Federal Reserve allegedly pushed for troubling information to be withheld from Bank of America Corp shareholders about the takeover of Merrill Lynch & Co.

Both episodes serve as a reminder of why investors still need the Securities and Exchange Commission. Even if the SEC has sometimes looked like the Keystone Cops, it is still the one agency charged with protecting investors' interests, as opposed to, say, insuring the stability of the financial system.