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Interesting (very lengthy) article about derivatives regulation and how a law becomes a regulation, or lack thereof, in 2013:
How the Bank Lobby Loosened U.S. Reins on Derivatives
How the Bank Lobby Loosened U.S. Reins on Derivatives
Derivatives were famously labeled “financial weapons of mass destruction” by investor Warren Buffett before they became accelerants in the 2008 meltdown and led to the $182 billion U.S bailout of AIG. The insurer couldn’t cover credit-default swaps it sold to banks when the global squeeze began. The derivative rules now taking shape are a core element of Dodd-Frank, the government’s biggest foray into regulating the financial industry since the SEC was created during the Great Depression.
The stakes are high, both for big banks that have earned more than $50 billion a year dealing in derivatives and for the larger economy. While they are rarely traded by individuals, many businesses and institutions use derivatives in investment strategies, which affect heating-oil prices, college savings funds and highway projects. Dairy farmers buy them to protect against sudden price increases in corn and soybean meal for their cows, helping to keep milk prices stable for consumers.
The CFTC has produced about 60 rules for derivatives. This story reviews how the banking industry and its allies forced Gensler to retreat on the three most consequential ones for Wall Street. It is based on agency, court and congressional records; private notes, e-mails and documents; and interviews with dozens of executives, lobbyists and U.S. officials, some of who spoke on condition of anonymity to describe private meetings....
The stakes are high, both for big banks that have earned more than $50 billion a year dealing in derivatives and for the larger economy. While they are rarely traded by individuals, many businesses and institutions use derivatives in investment strategies, which affect heating-oil prices, college savings funds and highway projects. Dairy farmers buy them to protect against sudden price increases in corn and soybean meal for their cows, helping to keep milk prices stable for consumers.
The CFTC has produced about 60 rules for derivatives. This story reviews how the banking industry and its allies forced Gensler to retreat on the three most consequential ones for Wall Street. It is based on agency, court and congressional records; private notes, e-mails and documents; and interviews with dozens of executives, lobbyists and U.S. officials, some of who spoke on condition of anonymity to describe private meetings....
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