This week The New York Times quoted the Securities Industry Association’s support for a consolidation of the enforcement departments of self-regulatory organizations, including the NASD and NYSE. The SIA even wants the right to have a seat on the board of this single market regulator.

This stance is probably a response to heavy fines levied this past year for wrongful activities picked up by the regulators. The NASD’s regulation arm alone levied over $100 million in fines for rule violations. This, on top of the big fines issued by the New York Stock Exchange’s counterpart, has the industry up in arms, wanting a say on the board and a concomitant reduction in the number of policemen.

The Exchanges would argue that escalating fines are warranted and necessary to keep an industry upon whom the investing public relies from running amok. Whether it’s one, two or multiple regulators isn’t really the issue. Rather, the poor response to the need for improved corporate governance and compliance is what has cost the industry dearly in the past few years. This, coupled with the increased scrutiny and blockbuster settlements being extracted by state securities administrators like New York’s Eliot Spitzer, hurts the bottom line.

Having too many regulators is a misplaced criticism by the industry. Giving a seat to the SIA would do nothing to promote market integrity and investor confidence, which remains on the wane as the Refco bankruptcy unfolds, mismanaged hedge funds and tax shelters fold and the country tunes into the trial of Enron’s hapless corporate management.