Forget Obama's Speech, Here Are 6 Simple Ways to Reform Wall Street

"One year ago, we saw in stark relief how markets can err; how a lack of common-sense rules can lead to excess and abuse; how close we can come to the brink. One year later, it is incumbent on us to put in place those reforms that will prevent this kind of crisis from ever happening again."
-- President Barack Obama, September 14

A year after the Lehman collapse paralyzed the financial system and the economy, will President Obama back the rhetoric with action? Furthermore, what form should Wall Street regulation take?

With that in mind, Barry Ritholtz, CEO of Fusion IQ and author of Bailout Nation, has a list of reforms Wall Street needs. Not coincidentally, most would reverse legislation enacted in the years just prior to the credit crisis and subprime meltdown:

• Reinstate Glass-Steagall Separating banks from brokerage firms guarantees that "when Wall Street hits the wall… it doesn't cause the banks to do the same,"  says Ritholtz, who claims the Act was a major reason why the economy didn't come crashing down along with stocks in October 1987.
• Repeal the Commodity Futures Modernization Act  This rule "allowed derivatives to be exempt from all the rules that affect every other traded financial instrument," and was a root cause of AIG's problems, he says.
• Overturning the so-called Bear Stearns rule allowing leverage beyond 12 to 1 The SEC's 2004 rule change, which eliminated some leverage restrictions on investment banks in favor of capital requirements by type of asset was a mistake, says Ritholtz.  "Without overturning that, give us 5-10 years, we'll be right back where we started."
• Continuing to allow high-risk trades to be compensated regardless of profitability This issue is one already being addressed by the so-called Pay Czar Kenneth Feinberg.  
• Regulating the non bank sub-prime lenders and mandating (and enforcing) lending standards This one is pretty self-explanatory and one few argue as a key reason for the subprime debacle.