Enforcing Wall Street Reform

integrity in finance

Enforcing Wall Street Reform


Rules are important. Regulations are important. Boundaries of acceptable actions are important.  Enforcing Wall Street Reform is the difference between real change and lip service. Just as the rules guiding the behavior of a child, regulations are boundaries.

Boundaries with children, like telling a child they have to finish their meal. If they don’t finish, they won’t have dessert.  Giving a curfew that, if broken, will result in their being grounded. Both provide boundaries for behavior. If boundaries are crossed, a pre-defined punishment will be enforced. 


Walk into any compliance officer’s office and you will find row upon row of rulebooks. But those large leather-bound rulebooks can only offer the framework. They provide guidelines, regulations, and precedence. They can’t enforce the appropriate body to be in compliance and to punish wrongdoers.  But in order for all those “boundaries” to work, regulators have to enforce noncompliance.

Madoff Investment Fund was reported to the SEC 9 times by an asset manager in Boston.
Nothing further than a cursory investigation was undertaken. An investigation that would have taken an hour (at most) comparing “Madoff” trades to actual times and sales. The amount of heartache and destruction a full investigation could have prevented is staggering.

Jon Corzine directly or indirectly allowed the desegregation of clearinghouse funds.
The most fundamental cornerstone of clearinghouse safety to date, Corzine has yet had to answer for either his actions or lack of oversight. Investors received 84 cents on the dollar and the industry seems to have moved on from the event.


In 2008, the great credit crisis reaches its height.  Congress bangs on their tables seeking a solution. They author a bill, Dodd-Frank in 2010, which is heavy on detailed rule changes and light on enforcing derivatives reform.

I question their surprise.  They saw the actions which were taken leading up to the crisis:   

  • The passage of the Affordable Housing Act under G.W. Bush.  
  • They must have considered the results of The Affordable Housing Act.
    • The impact securitization has on the mortgage banker’s prudence, given their limited 90-day exposure to the original mortgage.  
      • i.e., short cuts such as low doc/no-doc mortgages, teaser rates, etc.    
  • They must have considered other ramifications before completely dismantling The Glass-Steagall Act.  

Today we see new regulations coming online.  But regulations without consequences are meaningless. Unless reports of non-compliance are investigated, unless obvious violations are punished completely, unless there’s a focus on enforcing derivative reform, any regulation is just words on a page. 


Dodd-Frank must include enforcement with punitive measures. Using the sandbox as an analogy, if a person cannot follow the rules of the sandbox, they should be removed from the sandbox. Permanently. 

Anywhere large amounts of money are involved, people need to examine their personal ethics and moral compass. Maybe if summer homes and new cars became secondary to fiduciary responsibility a culture of morality would grow organically.  


Don’t get me wrong, I’m not a charity. I work with the client offering the most money. It’s just good business sense but that doesn’t eliminate my need to include ethics and integrity with which I make my business decisions.

The handshake agreement may be outdated in reality, but “You’re done” is still a binding contract in financial markets.  More people need to see their words as their bond and value their reputation more than anything.  

Well, at least that’s how I see it.


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