What Dodd-Frank Didn’t Fix: The Most Dangerous Aspects of Wall Street

By Pam Martens: December 13, 2013

Candidate Obama Promised Change We Can Believe In

For those being lulled into a sense of comfort or complacency by the announcement that the Volcker Rule was approved this week (it won’t take full effect until 2015 and maybe not even then), here’s a reminder of what the Dodd-Frank financial reform legislation and the Volcker Rule have not fixed.

The corrupt structure of Wall Street is thriving and continues to perpetuate its wealth transfer system. Over 40 black pools are still in existence; the biggest Wall Street firms are still able to dodge putting their customers’ trades on a stock exchange and, instead, match the orders in the darkness inside their own house. Wall Street has given this the benign sounding name of “internalization.” We call it dark markets.

Nothing has stopped the high frequency traders from fleecing the little guy who is trying to sell his 100 shares at a fair price.

Nothing has stopped Wall Street from fleecing as much as two-thirds of your 401(k) over your working career through hidden fees and commissions.

Yesterday, Merrill Lynch and its parent, Bank of America, settled with the Securities and Exchange Commission for Merrill’s egregious abuse of investors in mortgage bond deals. Bank of America paid $131.8 million to make the charges go away. No one had to admit any wrongdoing. Weren’t we led to believe that this practice of settling for large monetary fines without owning up to the wrongdoing was going to change? Without this change, corruption continues to be a very lucrative profit center on Wall Street – steal billions and pay off regulators with millions.

As we reported in October, banks are still failing at ten times the pre-crisis rate. And much of this failure has to do with the inability to compete against the banking behemoths. On March 31, 2009, the FDIC reported that there were 8,246 FDIC insured institutions with total domestic deposits of $7.5 trillion. Four institutions, Bank of America, JPMorgan Chase, Wells Fargo & Co. and Citigroup, four institutions out of 8,246, controlled 35 percent of all the insured domestic deposits in 2009.

By June 30, 2013, according to FDIC data, the 8,246 banks and savings institutions had shrunk to 6,940 institutions. Bank of America, JPMorgan Chase, Wells Fargo & Co. and Citigroup, now control a combined $3.511 trillion in domestic deposits, a stunning 58.8 percent of all 6,940 U.S. banks’ domestic deposits of $5.966 trillion. The market share of these four mega banks has increased by 24 percent in just 4 years.

And each of these mega banks (that together hold the bulk of the insured life savings of Americans) owns an investment bank and brokerage firm making daily speculative, highly leveraged bets on derivatives and the stock market and the futures market. The Volcker Rule cannot stop that; only the restoration of the Glass-Steagall Act can separate insured depository banking from casino gambling on Wall Street.

Nothing has changed when it comes to Wall Street’s lawyers heading up the major regulatory bodies.

Nothing has changed when it comes to the firing of whistleblowers.

Wall Street is still the only industry in America allowed to run its own private justice system outside of the courts of this nation; outside of case law and legal precedent; with huge forum fees imposed on the victim of the crimes.

Our nation was promised change we could believe in. We’ve been delivered a more dangerous system.


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