What candidate O'Malley has in store for Wall Street

Martin O'Malley
Andrew Harrer | Bloomberg | Getty Images

Wall Street is rapidly turning into the leading foil for Democratic presidential candidates.

Sen. Bernie Sanders of Vermont has surged in the polls with unvarnished attacks on "greed" in the financial sector and promises of steep tax increases for top earners. Now, former Gov. Martin O'Malley of Maryland has released a "white paper" that proposes a series of steps to boost taxes for and to dismantle Wall Street institutions and increase the risk of criminal prosecution for members of the financial sector.

O'Malley's bid for fresh attention among Democratic primary voters includes a new "economic crimes" division of the Justice Department and doubled funding for the Commodity Futures Trading Commission and the Securities and Exchange Commission. He would reinstate the Glass-Steagall divide between commercial and investment banking, and "right-size" the largest financial institutions to go beyond the mandates of the Dodd-Frank Act toward the goal of ending "too big to fail."

To increase political accountability, O'Malley would make the president of the New York Fed and the general counsel of the Federal Reserve presidential appointees. He would lengthen the "revolving door" ban on ex-regulators representing Wall Street before their ex-agencies to three years. And he would propose a financial transaction tax to limit high-frequency trading—"well-designed not to soak financial traders, but to fix incentives for speculation that comes at the cost of real job-creating investment."

Read More Pelosi: No consensus with Warren's view on Wall St. regulation

O'Malley's lagging position in the Democratic race limits, at least for now, the significance of his proposals. But should he gain momentum, the combined pull of his and Sanders' challenges could increase pressure on the overwhelming front-runner, former Secretary of State Hillary Rodham Clinton.

Clinton has signaled her intent to lay out economic proposals over the next few weeks. For now, she remains coy on how aggressive they will be; in a CNN interview this week, for example, she declined to indicate whether she will propose tax increases.