O’Malley sets aim on Wall Street in new proposal

Former Maryland Gov. Martin O’Malley took aim at Wall Street and the regulators overseeing it, laying out an ambitious plan to overhaul the financial sector.

The Democratic presidential candidate argued massive banks have gotten a pass since the financial crisis, painting regulators as beholden to industry interests.

{mosads}“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,” the campaign said at the outset of a 10-page white paper.

He also paired his plan with an open letter to the nation’s largest banks, vowing to bring the hammer down on them if voters send him to the White House.

“If you — and your megabanks — which we, the American taxpayer, saved want to begin to restore the confidence in your leadership, you need to start by saying two things: ‘we’re sorry’ and ‘thank you.’ ”

O’Malley’s proposal marks the most detailed plan to overhaul the financial sector from Democratic candidates so far and contains several ideas previously put forward by Sen. Elizabeth Warren (D-Mass.), perhaps the nation’s best known Wall Street critic and a liberal favorite.

Among O’Malley’s proposals are barring a number of top financial regulators from working in the financial sector for three years after leaving public service, aimed at what he called a “constantly spinning revolving door.” He also would require more top regulatory positions to be appointed by the president and confirmed by the Senate.

If elected, O’Malley also vowed to overhaul the structure of the financial sector, first by re-establishing the firewall between conventional and investment banking by reinstating the Glass-Steagall Act. Such an effort could be a tall order though, as similar legislation introduced in recent Congresses have gone nowhere.

He also said he would direct regulators to break up big banks if they cannot produce feasible plans for their resolution if they were to go bankrupt, and subject big banks to higher capital requirements.

He also promised to double the funding levels for the Securities and Exchange, and Commodity Futures Trading commissions. President Obama has repeatedly pushed for funding boosts for the regulators, but a GOP-controlled Congress has instead kept funding levels relatively flat, despite increased responsibilities handed down by the Dodd-Frank financial reform law.

O’Malley also singled out the Justice Department for particular scorn, arguing the nation’s legal team was weak-kneed when it came to Wall Street. He promised to establish a specific “economic crimes” team at the DOJ if elected, and ban the practice of allowing banks to settle enforcement actions without admitting guilt.

He also proposed a “DMV-style” points system for banks, which would publicly tally up wrongdoing for each bank, and subject them to additional penalties as the numbers rose.

However, the rollout of O’Malley’s plan was not without bumps. An earlier version of his white paper cited a satirical newspaper, The Daily Currant, as a footnote saying former Attorney General Eric Holder took a $77 million job with JPMorgan.

Holder actually returned to his old law firm, Covington & Burling, after leaving the administration, presumably for less than $77 million a year. The footnote was quickly updated to reflect that fact.