Big Investment Banks Say ” Leave Our Derivative Products Alone.” Congress Says ” Not So Fast.”

” A Pale Green Mermaid Blog “


Congress is working on the financial reform bill, the big investment banks –

( I always try to say big investment banks because it is those banks that are too large to fail that make their money on trading and derivative products who caused the meltdown the smaller community banks mostly provide financial services to the public)

want the derivative products to remain in the shadow banking system where transactions are not always made publicly,

From below,

” The financial legislation proposed by the Obama administration and passed by the House would require most derivatives to trade on public exchanges, in the belief that a transparent marketplace will be safer and cheaper.”

Congress also wants the inexpensive money that is lent to banks be used in majority for lending to the public,

“Then the chairwoman of the Agriculture Committee, Senator Blanche Lincoln, Democrat of Arkansas, dropped a bombshell in April, introducing language that would require banks to choose between trading in derivatives and remaining under federal protection.

The government’s umbrella, including deposit insurance, allows banks to raise money at lower cost than other financial institutions. Mrs. Lincoln said the bill would help to ensure that banks use that cheap money for traditional activities like lending.”


Banking leaders stated that the reform  Senator Lincoln proposed was “irresponsible” and displayed a basic ignorance of the financial industry,

“Banking executives were caught flat-footed by Mrs. Lincoln’s provision, and many are still seething. One senior executive at a major financial institution, speaking on condition of anonymity so he could talk frankly, said the idea was “irresponsible” and the details revealed a basic ignorance about the financial industry.”


Let’s think about that,

those same banking executives said that the derivatives were too complicated to explain when the meltdown occurred within their banks…

so maybe it is they who do not understand the derivative products ( they created)

OR  how the financial system works –

the same system that they claim to be experts in.


Mr. Daniel F.C. Crowley, a partner at the K&L Gates Law firm and industry lobbyist suggested,

“These swaps have become standard bank products. The proper response would be to recognize that the markets have evolved and there’s been innovation and they need to be regulated by bank regulators rather than pretending that they’re not integral to the system,” said Daniel F. C. Crowley, a partner at the K&L Gates law firm and an industry lobbyist.


So do your own research and contact congress with your views.




note: excerpts from, business section

Article -” Banks Lobbying Against Derivatives Trading Ban “

Published: May 9, 2010

1 Comment

Filed under Economy

One response to “Big Investment Banks Say ” Leave Our Derivative Products Alone.” Congress Says ” Not So Fast.”

  1. Pingback: Financial ETFs Feel Heat of Derivatives Crackdown | equity loans

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