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Here's Proof a New Glass-Steagall Act Could Rein in the Big Banks

insider trading

The Too-Big-to-Fail banks have a notorious track record of avoiding, evading or eliminating nearly all of Washington's attempts to bring them to heel.

So skeptics can be forgiven for thinking that the recently proposed new Glass-Steagall Act won't change anything on Wall Street.

As the moniker "Too-Big-to Fail" implies, such banks are not easy to push around.

"No bank will ever get out of a profitable line of business, unless they're forced to, or there's a huge loss that threatens the perception of the banks' risk management, or some scandal forces a mea culpa and an exit," said Money Morning Capital Wave Strategist Shah Gilani, who as a former hedge fund trader understands how Wall Street thinks.

Yet the Too-Big-to-Fail banks have recently pulled back in one area - physical commodities trading - as a result of regulatory pressure from several directions.

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Why the Dodd-Frank Act Didn't Work

On July 21, the Dodd-Frank Act turned three years old.

But, unlike most three-year-olds who can walk and talk, this one hasn't gotten out of the crib yet...

You see, the Dodd-Frank Act was a promise to protect Americans from the excesses and ruthlessness of Wall Street. It was meant to streamline the regulatory process.

But three years later, we are still waiting for its full implementation.

In fact, as of last week, only 155 of 398 rules required by this law are considered final.

That's because instead of focusing on the systemic problems that caused the crisis, the pen to write the bill ended up in the hands of disconnected agencies and lobbyists.

Instead of fixing the serious problems of current law, Dodd-Frank failed to curtail Wall Street - just a few years after a major financial crisis.

At a time when Sen. Elizabeth Warren, D-MA, and Sen. John McCain, R-AZ, have pushed for a new Glass-Steagall Act to reduce risk, some voices like Treasury Secretary Jack Lew argue that the Dodd-Frank bill will alleviate the problems of Too Big to Fail, systemic risk, and cronyism.

But we know that such arguments are spurious at best.

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Four Companies That'd Benefit From Corporate Breakups - the Last One May Surprise You!

June 28 saw the corporate breakup of News Corp (NASDAQ:NWSA), the world's 2nd largest media-entertainment conglomerate with some $34 billion in revenues worldwide.

The split took over the headlines and had investors in a tizzy.

When you own equity in a company that undergoes a corporate breakup, you may stand to earn major profits - if it's the right approach for that particular company to stimulate earnings and growth.

Money Morning's Chief Investment Strategist Keith Fitz-Gerald explains how corporate breakups can benefit - or sting - investors:

    "Many times there is a breakup premium attached to a stock when assets are worth more than the sum of their parts. The same is true of revenue streams that are suddenly freed of costs that belong to other divisions or products.

    "Conversely, if a breakup goes badly, that's usually because investors find problems that weren't apparent when the entity was held whole."

After 14 Years of Free-for-All, Glass-Steagall Is Back

The diminutive senator from Massachusetts has got the Big Banks shaking in their boots. Elizabeth Warren fired a Scud missile of legislation at too-big-to-fail banks to separate their commercial banking activities from their investment banking speculation.
Let's see, that might just limit the contagion during the next financial crisis. Find out why Shah Gilani thinks the senator is right on the money...

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Glass-Steagall is a Dream Worth Revisiting

There's a dream keeps returning, like rain to the sea.
There's a fire ever burning in the souls of the free.
There's a lifetime of learning that it's all been in jest.
And at the end of your journey, it's like you never left.

~ Dave Mason

Those lyrics are great. They apply to a lot of things in life.

That includes me seeing the legendary Traffic singer/songwriter and guitarist Dave Mason, after last seeing him 10 years ago.

He was once again at The Stephen Talkhouse in Amagansett, New York. I saw him with some old friends two weeks ago.

Besides being a legend, he's a really good man.

He's supporting Wounded Warriors and other projects, like Work Vessels for Veterans, which helps support veteran entrepreneurs trying to get their business dreams off the ground.

I urge you all to contribute and to help the incredibly brave men and women in our armed forces who sacrifice so much and get so little in return.

But I digress... although it is for a good cause. We can never do enough for our troops!

There's another dream that's returning today. And it is one that many of you have been actively dreaming about.

It's the return of Glass-Steagall.

Like rain to the sea, the fallout from the implosion of too-big-to-fail banks that poisoned our capital markets and economy may, God willing, help resurrect the Depression-era legislation that separated commercial banks from investment banks.

I've been calling for that for years now. And almost all of you are soldiering with me in that camp.

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