FIVE REASONS WHY FINANCIAL REFORM IS A SHAM

Want to know why financial reform, also known as the Dodd-Frank Act, hasn't done much to slow down the gambling on Wall Street? Money Morning's Garrett Baldwin discusses the reasons here. I've synopsized Baldwin's arguments below. In brief, Dodd-Frank isn't effective because ...

1. Ex Post Facto Power: Dodd-Frank creates rules - like the FDIC's "resolution authority" - that kick in after a crisis happens, while postponing or watering down rules that would prevent a crisis in the first place. 

2. Too Big To Fail (still): Together JP Morgan Chase, Citibank, Wells Fargo, and Bank of America have enough assets under their roof that it equals 97% of the GDP of the U.S. in 2012. Dodd-Frank does nothing to alter this.

3. No Glass-Steagall Firewalls: The commercial and investment activities of each of these banks remain under one roof. Because of propietary trading, interconnectedness, and repo activities, a collapse in one area of the bank could drag the rest of the bank(s) with it. 

4. Volcker Rule Neutered: While the Volcker Rule was designed to prevent banks from using client accounts and FDIC insured deposits for their financial benefit the Volcker Rule has been so watered down as to render it toothless. 

5. Bank Lobbying Dominates: Banks get far more face time with lobbyists than do reform groups. To date Goldman Sachs has had 222 meetings with regulators while JP Morgan has had 207. This is one of the reasons why the Volcker Rule was neutered and only 159 of 389 Dodd-Frank rules have been finalized.  

To this I would add that even when the financial sector gets caught they're allowed to pay fines rather than have anyone go to trial, let alone get convicted.

In a few words, when it comes to addressing the issues that led to the 2008 market collapse big loopholes remain. So, yeah, white-collar crime still pays.

- Mark