Banks fight plan to regulate derivatives

Source: The Australian

WALL Street is suiting up for a battle to protect one of its richest fiefdoms -- the $US592 trillion ($709 trillion) over-the-counter derivatives market that is facing the biggest overhaul since its creation 30 years ago.

Five US commercial banks, including JPMorgan Chase, Goldman Sachs Group and Bank of America, are on track to earn more than $US35 billion this year trading unregulated derivatives contracts.

At stake is how much of that business they and other dealers will be able to keep.

"Business models of the larger dealers have such a paucity of opportunities for profit that they have to defend the last great frontier for double-digit, even triple-digit returns," says Christopher Whalen, managing director of Torrance, California-based Institutional Risk Analytics.

The Washington fight, conducted mostly behind closed doors, has been overshadowed by the noisy debate over healthcare.

That's fine with investment bankers, who for years quietly wielded their financial and lobbying clout on Capitol Hill to kill efforts to regulate derivatives.

This time could be different. The reason: widespread public and congressional anger over the role derivatives such as credit default swaps played in the worst financial crisis since the Great Depression. "Public sentiment isn't very much in their favour," says Richard Lindsey, a former director of market regulation at the US Securities and Exchange Commission who worked at Bear Stearns Co from 1999 to 2006, referring to Wall Street firms.

"In some places, they're not going to have anybody who wants to listen to them."


Read more: http://www.theaustralian.news.com.au/business/story/0,28124,26022572-36418,00.html

ETAsk: What does this mean? "paucity of opportunities for profit "

aka legalized, unregulated, INSURED (via gov't bailouts) GAMBLING!

:)

Which is what they did here.

if a Democratic president and Congress lets this outrage continue we are worthless as a party.

...........You are NOT reading or hearing about this REALLY BIG news story. The US media is sitting on their hands on this one, and why not? Most if not all of the papers and TV stations/networks are owned by super huge corporations that either are heavily financed or a subsidiary of Wall street.

Is this a good thing or a bad thing for health insurance reform? I'll be glad when this debate has been settled, it was a long August.

.........half honest you would have at least heard more on "Medicare for all". Even MSNBC as of yesterday seems to be pushing (more than before) the "drop the public option" meme.

.............version of censorship.

It seems like there is some trust-busting to be done.

It's so comical to read.

Really. Who would have thunk it?

of course, the reality is that it's an "inside job", with the bankers robbing the public blind.

They want to do it all again. With bonusses. I am about tired of this wealth redistribution.

It these are supposed to be some sort of "insurance" against financial trouble, they have done a really, really bad job of it.

It will be a fight I'm not optimistic about.

"Any bank which trades in unregulated derivatives is prohibited from receiving government money".

Let's see if they like gambling with their own money.

They have so much money and with it, power. They can buy just about anybody in congress off. They have all the republicans in their back pocket , all they need is one Dem in the senate to filibuster any legislation they disagree with.

Just starting to fix the problems that got us into this mess. Without an absolute win, and that means no compromises with the banks, the current financial meltdown will just happen again and again. And all the debt we've encumbered for the stimulus money will have been for nothing.

....I don't trust corporate casino banking or their lackies on wall street, and in congress....let them keep their unregulated market-crashing ponzi-schemes so long as we and main-street have an independent, government run and secured, non-profit National Banking System administered by the federal government....and let the moral-hazards doctrine resume....

....but like all legislation produced by congress for the rich, they'll write the new set of regulations just as soon as corporate America constructs a way around them....laws and regulations are for chumps like us....