Wall Street Wins Again!
Big Business gets a break on financial reform
WASHINGTON (CNNMoney) -- Big business scored a major win Wednesday when two regulatory boards agreed to limit the impact of tough rules to regulate the complex trades that helped spur the 2008 financial crisis.
Regulators have been struggling for months to figure out who should be included in a new crackdown of swaps or derivatives -- complex financial bets derived from other financial products such as the price of jet fuel or mortgages.
Derivatives were the key reason that American taxpayers were on the hook for the American International Group (AIG, Fortune 500) bailout in 2008. Derivatives also threatened to take down the global financial system when Lehman Brothers collapsed.
When Congress passed Wall Street reforms in 2010, lawmakers left the big decisions of how to regulate derivatives up to supervising agencies. Generally, the Democratic-controlled Congress wanted swaps to be more transparent and safer.
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http://money.cnn.com/2012/04/18/news/economy/swaps-rules/
It's like everyday it's Groundhog Day.
= new reply since forum marked as read
The derivatives are in the big banks' playground, so We the People are on the hook for the FDIC deposits that back them up.
Yeah. See. Whaddya expect?
Details Of The 291 Trillion In Derivatives To Which American Taxpayers Are Exposed
EXCERPT...
In fact, FDIC has made far more information about derivatives public, over the last 3 years, than the Fed and OCC ever disclosed over decades. The numbers reveal a frightening concentration of risk. Five large "TBTF" US banks hold 96% of derivatives issued in the United States.
But the Bank for International Settlements in Switzerland reports that about $707.6 trillion worth of derivative obligations have been issued worldwide as of the end of 2011. That leaves about $417 trillion worth of derivatives that are not accounted for, in the FDIC records.
The surplus derivatives have been written mostly in London. Part of the exposure is held on the balance sheets of foreign, mostly European banks, including Deutsche Bank, PNB Paribas, Credit Suisse, UBS et. al. But, a large number of seemingly foreign derivatives is also hidden inside bank divisions, owned by American institutions, who do business in London. Such derivatives are not reported to the Fed, the OCC or the FDIC. Lenient British banking laws insure that these opaque obligations are not subject to public scrutiny.
Ultimately, if London-issued derivatives eventually cause massive losses to a UK bank division, the US based bank that owns it would end up being closed or bailed out. Ultimately, just like the derivatives issued in New York, the American taxpayer and dollar-denominated saver will pay the bill. Unfortunately, in spite of this, details about London-issued derivatives are not publicly disclosed or I cannot find them. If such data exists, a British lawyer or someone knowledgeable enough about UK regulations and bureaucracy would be needed to ferret it out.
