5 Great Ways to Reform Wall Street

Blain Reinkensmeyer

Posted on Tue 15th Sep, 2009 05:23:17 PM

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Yahoo Finance Tech Ticker had one of my favorite bloggers on today for some insight, Barry Ritholtz of The Big Picture. Aaron and Barry discussed the stock market today and why President Obama’s most recent speech has the right message regarding Wall Street reform but the wrong ideas.

I think Barry offers some phenomenal, clear cut, and all around realistic ways to reform Wall Street. While it is a long shot that the government will actually implement all of them, they are definitely worth mentioning.

1. Reinstate Glass-Steagall – Separate banks from brokerage firms.
2. Repeal the Commodity Futures Modernization Act – Regulate derivatives on an exchange.
3. Overturning the so-called Bear Stearns rule allowing leverage beyond 12 to 1 – Dont allow the big guns to over leverage themselves and take on obscene amounts of risk. 12:1 should be the limit.
4. Continuing to allow high-risk trades to be compensated regardless of profitability – Traders and execs should not be compensated BEFORE a bet is actually played out. Pay should be based on clear cut RESULTS.
5. Regulating the non bank sub-prime lenders and mandating (and enforcing) lending standards – Add regulation to stop the subprime debacle from occurring again down the road.

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