We Are Doomed: Banks Lobbying For More Deregulation Of Derivatives

I would say this is like bashing your head against a wall repeatedly, but that’s downplaying it. I shouldn’t believe this, but there it is.

Federal regulators are considering backing off a plan to curb Wall Street’s control over the derivatives market, another potential win for the big banks.

Last fall, the Commodity Futures Trading Commission proposed rules that would prevent a bank or financial firm from controlling more than 20 percent of any one derivatives exchange or trading facility. Now, regulators are discussing lowering the cap, according to people with knowledge of the matter.


Seriously, deregulated derivative markets have helped to cause one of the largest economic recessions in U.S. history. Sure, Wall Street had a few bumps on the road but they got right back on their feet (with some help from the U.S. taxypayer). That isn’t the case for the average middle and lower class American.

These people were given the keys to the bank, they robbed it, and you’re giving them a second chance.

Do we have a Democratic Republic anymore or a permanent Robber Baron enrichment scheme? Sweet Jesus.


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  • C.S.Strowbridge

    Timmy: “Do you have any ideas?”

    Blasting them off into space. But apparently there are some legal issues and it might not be financially viable.

  • timmy

    A reasonable answer. But as I’ve mentioned here before, simply living to let live has its dangers, especially for those of certain temperaments. I’ve been burned badly by camouflaged sociopaths. In hindsight I believe I had the power to do something about it, but not the wisdom.

    So I post here, the way I do, to help discipline myself to remain vigilant while not sweating the small stuff. And of course, sociopathy would be relatively powerless if it weren’t for the useful fool, who are so common nowadays, and an interesting study.

  • Buzz Killington

    timmy, personally speaking, I try to keep in mind the wisdom of Daniel Kahneman, “Nothing In Life Is As Important As You Think It Is, While You Are Thinking About It”. In terms of trying to “solve the problem” I honestly don’t. I can’t help feeling it’s like an addiction, and nothing can be done until it hits rock bottom, but that’s probably falling into the very trap Dr. Kahneman is warning about.

  • timmy

    The way I avoid complete misanthropy, is to place blame for most social ills on the various forms of sociopathy (which constitutes a small fraction of the population) and focus on limiting its access to power.

    Do you have any ideas?

  • Buzz Killington

    You are down to voting for a party that is 95% evil and / or stupid or voting for a party that is 99% evil and / or stupid.

    Unless you have $100 million in the bank, you don’t matter.

    This. And people get so enraged while arguing that their party is the one that’s only 95% evil/stupid… that’s today’s politics in a nutshell.

  • C.S.Strowbridge

    TTC: “That part about America being fucked? Yeah.”

    And if America instead votes in a Republican, the country will be fucked, only it will get there faster and the Tea Party morons will be cheering the decline.

  • fafaroo

    My favorite conservative whine is when they complain about Obama’s failure to implement policy promises that they oppose.

  • http://frankdisalleisadummy.wordpress.com/ The Dark Avenger

    Tim’s an idiot who wants attention.

  • db


    Your comments remind my of a guy about 10 years ago who touted “Compassionate Conservatism”. Seems he was only right about the 2nd part.

  • http://www.thetimchannel.com The Tim Channel

    I wouldn’t worry. After Obama’s second term, there’ll be some bright, charming, intelligent liberal politician who will capture the spotlight, much as Obama did.

    He or she will speak eloquently on the various topics of interest to highly motivated throngs of rank and file. Hints, if not overt promises, of an end to war, sensible environmentalism, science based education, and single payer healthcare will abound. The people will feel really good about this change in direction. Pop singers will commit considerable time and energy to the creation of the hit single “This Time For Sure”. The Democratic candidate will win in a landslide.

    I can’t accurately predict why the promises made will be broken, only that they will be. Maybe it’ll be based on some past excuse that worked well. Maybe it’ll take something a little more creative to sucker the crowd?

    That part about America being fucked? Yeah.


  • C.S.Strowbridge

    You are down to voting for a party that is 95% evil and / or stupid or voting for a party that is 99% evil and / or stupid.

    Unless you have $100 million in the bank, you don’t matter.

  • http://frankdisalleisadummy.wordpress.com/ The Dark Avenger

    When considering T.R., one should take into account that he came into the Presidency by accident, and remember the prescient though Mark Hanna, the Republican bigwig of the time, said about him in 1900:

    Hanna and Roosevelt

    Hanna and Theodore Roosevelt had been allies when they met in 1884, but they became rivals, initially due to their disagreement about the Spanish-American War. Roosevelt strongly favored war with Spain; Hanna resisted war until public opinion demanded it. In 1900, New York politicians wanted Governor Roosevelt to become vice president. He reportedly warned some who spoke out in favor of Roosevelt becoming vice-president, “Don’t any of you realize there’s only one life between that madman and the presidency?” Hanna, however, lacked the political power to stop it. Once one of the leading powers in the conservative faction of the Republican party, Hanna lost influence when McKinley was assassinated and replaced by Roosevelt. Upon hearing the news, Hanna reputedly remarked that “Now that *** cowboy is president.” Hanna and Roosevelt worked together (particularly on the Panama Canal), and although they remained personally cordial, they considered each other political rivals.

    Mark Hanna can be considered one of the the direct ancestors of todays’ Tea Party fools:

    He once told the Ohio attorney general, who sued to dissolve Standard Oil, to drop the suit. ‘Come on,’ Hanna pronounced, ‘you’ve been in politics long enough to know that no man in public life owes the public anything.’


    Domestic policy


    Determined to create what he called a “Square Deal” between business and labor, Roosevelt pushed several pieces of progressive legislation through Congress.

    Progressivism in the United States was the most powerful political force of the day, and in the first dozen years of the century Roosevelt was its most articulate spokesman. Progressivism meant expertise, and the use of science, engineering, technology and the new social sciences to identify the nation’s problems, and identify ways to eliminate waste and inefficiency and to promote modernization.[6] Roosevelt, trained as a biologist, identified himself and his programs with the mystique of science. The other side of Progressivism was a burning hatred of corruption and a fear of powerful and dangerous forces, such as political machines, the corrupt segment of labor unions and especially the new large corporations — called “trusts” — which seemed to have emerged overnight.[7] Roosevelt, the former deputy sheriff on the Dakota frontier, and police commissioner of New York City, was keenly interested in a law and order. Indeed, he was the first president with significant law enforcement experience, and his moralistic determination set the tone of national politics.[8][9]


  • KXB

    Dark Avenger,

    That is some very good info, but that was with FDR, not Teddy Roosevelt. Both faced obstacles in the economic arena, but of a different sort. FDR was in the middle of the Great Depression, whereas Teddy Roosevelt did not yet have an economic crisis on his hand. TR sought to break up what he thought was a dangerous concentration of economic power, whereas FDR sought different ways to revive the nation’s economic fortunes. It is the concentrated power of finance which Obama faces now that is most comparable to trusts that TR went about breaking up.

  • timmy

    Yeah, the facts are there. But is the political will/mob culture?

    I know there were frequent financial panics preceding TR, and working people were fed up:

    Slightly OT, but this guy implies that it was the rich and powerful themselves who allowed/wanted government intervention to keep the mob from storming the castles with pitchforks and torches:

  • http://frankdisalleisadummy.wordpress.com/ The Dark Avenger

    How did Roosevelt do it anyways? I know he was rich (meaning protected), but what social/cultural dynamics did he have on his side? Or was he just a ballsy dude?

    He had the facts on his side.

    Subsequent actions

    In 1932, the Pecora Commission was established by the U.S. Senate to study the causes of the crash. The U.S. Congress passed the Glass–Steagall Act in 1933, which mandated a separation between commercial banks, which take deposits and extend loans, and investment banks, which underwrite, issue, and distribute stocks, bonds, and other securities.

    After the experience of the 1929 crash, stock markets around the world instituted measures to suspend trading in the event of rapid declines, claiming that the measures would prevent such panic sales. Although much less significant (since it wasn’t part of a multi-day trend) the one-day crash of Black Monday, October 19, 1987, when the Dow Jones Industrial Average fell 22.6% was worse in percentage terms than any single day of the 1929 crash.

    Wall Street Crash of 1929


    The investigation was launched by a majority-Republican Senate, under the Banking Committee’s chairman, Senator Peter Norbeck. Hearings began on April 11, 1932, but were criticized by Democratic Party members and their supporters as being little more than an attempt by the Republicans to appease the growing demands of an angry American public suffering through the Great Depression. Two chief counsels were fired for ineffectiveness, and a third resigned after the committee refused to give him broad subpoena power. In January 1933, Ferdinand Pecora, an assistant district attorney for New York County was hired to write the final report. Discovering that the investigation was incomplete, Pecora requested permission to hold an additional month of hearings. His exposé of the National City Bank (now Citibank) made banner headlines and caused the bank’s president to resign. Democrats had won the majority in the Senate, and the new President, Franklin D. Roosevelt, urged the new Democratic chairman of the Banking Committee, Senator Duncan U. Fletcher, to let Pecora continue the probe. So actively did Pecora pursue the investigation that his name became publicly identified with it, rather than the committee’s chairman.

    Following the 1929 Wall Street Crash, the U.S. economy had gone into a depression, and a large number of banks failed. The Pecora Investigation sought to uncover the causes of the financial collapse. As chief counsel, Ferdinand Pecora personally examined many high-profile witnesses, who included some of the nation’s most influential bankers and stockbrokers. Among these witnesses were Richard Whitney, president of the New York Stock Exchange, investment bankers Otto H. Kahn, Charles E. Mitchell, Thomas W. Lamont, and Albert H. Wiggin, plus celebrated commodity market speculators such as Arthur W. Cutten. Given wide media coverage, the testimony of the powerful banker J.P. Morgan, Jr. caused a public outcry after he admitted under examination that he and many of his partners had not paid any income taxes in 1931 and 1932.

    As reiterated by U.S. Securities and Exchange Commission (SEC) Chairman Arthur Levitt during his 1995 testimony before the United States House of Representatives, the Pecora Investigation uncovered a wide range of abusive practices on the part of banks and bank affiliates. These included a variety of conflicts of interest, such as the underwriting of unsound securities in order to pay off bad bank loans, as well as “pool operations” to support the price of bank stocks. The hearings galvanized broad public support for new banking and securities laws. As a result of the Pecora Commission’s findings, the United States Congress passed the Glass–Steagall Banking Act of 1933 to separate commercial and investment banking, the Securities Act of 1933 to set penalties for filing false information about stock offerings, and the Securities Exchange Act of 1934, which formed the SEC, to regulate the stock exchanges. Paul Krugman believes that thanks to the legacy of the Pecora Commission’s hearings and subsequent regulatory legislation, the American economy had a sound financial system for roughly half a century.[1]

    The Banking Committee’s hearings ended on May 4, 1934, after which Pecora was appointed as one of the first commissioners of the SEC.

    Pecora Commission

  • timmy

    They are guarding all the doors, they are holding all the keys, which means that sooner or later, someone is going to have to fight them.

    How did Roosevelt do it anyways? I know he was rich (meaning protected), but what social/cultural dynamics did he have on his side? Or was he just a ballsy dude?

  • KXB

    Again, the original post is about the runaway financial sector, not natural disasters & the role the feds have in dealing with such disasters. Is it too much to request people stay on topic?

  • http://frankdisalleisadummy.wordpress.com/ The Dark Avenger

    KXB, Jindal is arguing against monitoring for possible natural disasters from volcanoes, which, like earthquakes and hurricanes can cause massive damage.

    That’s the point.

  • KXB

    Dark Avenger,

    We are discussing about curbing the financial industry’s excesses, and you go back to federal government spending. Let me know when you go out to the store, so you can add some items to your basket of apples and oranges. Toss in illegal immigration, ACORN, and Islamic socialism.

  • http://frankdisalleisadummy.wordpress.com/ The Dark Avenger

    You don’t really see anyone arguing against taking precautions against them.

    Sure you do, they just bunch it with other ‘questionable’ spending proposals:

    But Democratic leaders in Congress — they rejected this approach. Instead of trusting us to make wise decisions with our own money, they passed the largest government spending bill in history, with a price tag of more than $1 trillion with interest. While some of the projects in the bill make sense, their legislation is larded with wasteful spending. It includes $300 million to buy new cars for the government, $8 billion for high-speed rail projects, such as a “magnetic levitation” line from Las Vegas to Disneyland, and $140 million for something called “volcano monitoring.” Instead of monitoring volcanoes, what Congress should be monitoring is the eruption of spending in Washington, D.C.


  • Christopher Foxx

    KXB: The financial industry assures us that their reckless practices is simply the natural outcome of market forces.

    Earthquakes and hurricanes are natural outcomes as well. You don’t really see anyone arguing against taking precautions against them.

  • Bruce Henry

    In that last sentence, KXB, there you have it.

    So Oliver is right. we are doomed.

  • KXB

    A century ago, Teddy Roosevelt broke up the various trusts in steel, oil, coal, etc. Many business-people at the time made the argument that trusts were the most efficient way of doing business, and the government should not interfere in the workings of the market. Roosevelt disregarded that, seeing that such trusts were choking the consumer.

    We have a similar situation now. The financial industry assures us that their reckless practices is simply the natural outcome of market forces. They fail to mention the insurance coverage provided by the U.S. taxpayer. Your local pizza shop does not enjoy that sort of protection. The question is whether any politician, Republican or Democrat, stare down this new trust the way Roosevelt did? As much as I admire Obama, I do not think he is up to this particular job. Both parties are so addicted to contributions from Wall Street, that giving that up would be like unilateral disarmament.