Why We Need Banking Reform
November 13, 2009 by admin
The Huffington Post recently spoke with Senator Byron Dorgan, noting that he opposed the repeal of the Glass-Steagall Act in 1999. This law kept investment banks separate from commercial banks. Its repeal opened Pandora’s box, unleashing a financial beast upon the American people.
Keep in mind that some investment banks use a wicked combination of dark pools, high frequency trading, and flash trading. Dark pools are opaque trading platforms that enable big traders to execute large trades in virtually invisible ways. High frequency trading allows for rapid-fire order execution, giving the wealthy the speed that small retail investors lack. Last but not least is flash trading, which allows for a sneak-peak at pending trades before they’re executed.
Imagine visiting a local bank that also functions as a brokerage house. Deposit a check there and then, when it clears, use it for a stock trade. Now imagine your bank seeing your trade before it’s executed and trading ahead of you by using flash trading, dark pools, and high frequency trading. Maybe the result is that you didn’t get the best price for your trade. Perhaps you lost a significant amount of money. That’s the problem with a lack of consumer protection.
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