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Tear Down The (Chinese) Wall!

From the NY Times:

Wall Street is examining whether it will benefit from a little-known section of a broad new law that President Obama is expected to sign on Thursday.

Provisions tucked into the so-called JOBS Act, or the Jumpstart Our Business Startups, will roll back some major securities regulations and parts of a landmark legal settlement struck almost a decade ago. That 2003 settlement built a Chinese wall between Wall Street research analysts and investment bankers, an effort to prevent analysts from improperly promoting stocks to help their firms drum up business from corporate clients.

Under the new legislation, some of those restrictions would be eased when it comes to smaller companies, so-called emerging growth companies.

Wall Street senses an opportunity. Davis Polk, a large law firm that caters to Wall Street, wrote in a recent note to clients that the JOBS Act represented "the most significant legislative loosening in memory of restrictions around the I.P.O. process and public company reporting obligations."

The new legislation passed through Congress over the objections of regulators, past and present, who warned of the potential risks to investors.

"It is a bad sequel to a bad movie," said Eliot Spitzer, the former New York attorney general. "It shouldn't be called the JOBS Act, it should be called the Bring Fraud Back to Wall Street Act."

Welcome back to the good old days! Yes, this is how we de-risk banks.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.