O’Malley: Protecting The American Dream From Another Wall Street Crash by Martin O’Malley
Governor O’Malley knows that the American Dream today remains out of reach for too many families. To attack this problem, it will take a multi-pronged and fearlessly progressive approach to addressing economic inequality. But the results of any steps we take as a nation to raise wages, ensure retirement security, and make the dream of homeownership a reality can be wiped out in an instant by another Wall Street crash.
We need to protect America’s economy. And we can only do it by implementing strong accountability and structural reforms that build upon the Dodd-Frank Act and put an end to too-big-to-fail, too-big-to-manage, and too-big-to-jail financial firms.
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Governor O’Malley Bringing Real Enforcement To Wall Street-Finally
In April, former Fed Chair Paul Volcker wrote: “it is all too clear that the federal financial regulatory structure is simply inadequate to head off future crises. The structure that failed us in anticipating and responding to the emergency is largely still in place.”
He is right. While the Dodd-Frank Act made important strides forward in reforming the financial industry, there is still much work to be done—both in terms of structural AND accountability reforms.
As President, Governor O’Malley will change the culture of our regulatory and oversight agencies and departments by immediately pursuing the following reforms to ensure that Wall Street megabanks don’t get to play by their own set of rules. He will provide real deterrents to recidivist behavior among the worst actors on Wall Street.
Governor O’Malley’s Proposal: Financial Regulators Must Actually Be Independent
Today, there is a constantly spinning revolving door among both senior and mid-level regulators and the prosecutors responsible for reining in Wall Street. Senior officials at the Department of Justice1, Securities and Exchange Commission2, Treasury3 and other key departments have been deeply entrenched in the industries they are supposed to regulate, and often return to them after they leave government4., This practice undermines their independence and public trust in the federal government’s role of independent arbiter.
Governor O’Malley will:
Ensure Key Political Appointees Are Independent of Wall Street
Over the last seven years, both the SEC and DOJ have fallen down on the job of enforcement—sending a message to Wall Street that they are “too big to jail.”5 The most impactful step we can take toward stronger enforcement against Wall Street is appointing people to key positions who will take financial regulation seriously.
Governor O’Malley will:
- Appoint to Key Positions—Attorney General, Assistant Attorney General for the Criminal Division, SEC Chair—Individuals Committed to Pursuing Criminal Cases. The DOJ6 and SEC7 have been over-reliant on financial settlements for institutions that break the law. Settlements, even those in the billions of dollars, are not appropriate deterrents for institutions with trillions of dollars of assets. O’Malley will require that appointees to key positions have strong backgrounds in fighting for the public interest and a proven ability to prosecute people who break the law.
- Require the SEC Director of the Division of Enforcement to be a Presidential Appointee, Subject to Senate Confirmation. Currently, the SEC’s Director of Enforcement is appointed by and entirely at the discretion of the SEC Chair.8 In recent years, this has led to the indefensible practice of appointing both Wall Street in-house lawyers and their outside lawyers to this critical position9. O’Malley will elevate this position to presidential appointee, forcing this critical appointment to face greater scrutiny and transparency, along with a public vote from the U.S. Senate.
Close the Regulator/Prosecutor Revolving Door
- Institute a Three-Year Revolving Door Ban: O’Malley will bar anyone serving in a financial policy or regulatory role from working for any person or entity appearing before their former agency/department—or any agency/department they had contact with when serving the public—for three years. This triples and aggressively strengthens the existing bar, which currently applies only to “senior” officials10.
- Institute an Additional Three-Year Mandatory Disclosure Rule: In addition to the above ban, O’Malley also will require these individuals to disclose any direct or indirect contact with agencies/departments they had contact with for an additional three years.
See full PDF below.