5 Biggest Banks Gain another Victory in Control of $700 Trillion Derivatives Market

Tuesday, May 21, 2013

Federal regulators have softened a new regulation intended to make the derivatives market—which helped cause the financial crisis—more competitive among banks. A derivative is a contract whose value is based on other underlying assets, such as stocks, bonds, commodities, currencies, interest rates and market indexes.


Currently, just five banks control 90% of all derivatives contracts: JPMorgan Chase, Citigroup, Bank of America, Morgan Stanley and Goldman Sachs. The Commodity Futures Trading Commission (CFTC) had planned to require firms wanting a price for a derivatives contract to contact at least five banks.


But after lobbying from financial institutions, the CFTC lowered the requirement to two banks. CFTC officials claim the standard will increase to three banks in about 15 months.


The $700 trillion derivatives market allows companies to essentially gamble on deals made on Wall Street. Such activity nearly destroyed insurance giant American International Group before the federal government rescued it.

-Noel Brinkerhoff


To Learn More:

Big Banks Get Break in Rules to Limit Risks (by Ben Protess, New York Times)

Obama Administration Exempts 85% of Energy Derivatives Traders from Regulation (by David Wallechinsky and Noel Brinkerhoff, AllGov)

Federal Futures Regulator May Outsource Regulation to…the Futures Industry (by Noel Brinkerhoff, AllGov)


josh 7 years ago
What are you talking about? Wells Fargo has more derivatives than the entire US national Debt. More that 20 trillion US Dollars! Better put your money in a different bank!!!!
Stanley Hutchinson 10 years ago
It's a game designed to crash the Petro-Dollar Reserve currency. The bankster Alan Greenspan, Ben Bernanke, and their Gov't co-horts (Timothy Geithner, Gary Gensler, Henry Hank Paulson, George Soros, to name a few) need to be indicted and arrested for Breach of Fiduciary Trust and Grand Fraud and Breach of Business Judgment Rule, (which states would a reasonably prudent person do in that situation) it's not to gamble with money that doesn't exist and make REAL PEOPLE TAX PAYERS pay for it. It's NOT A TRANSFER OF WEALTH, IT'S A SANCTIONED THEFT OF WEALTH. Indict and arrest the criminals and the politicians that have sold out to them.
Derek 10 years ago
The money they talk about doesn't exist, but can destroy in reality.
Dave 10 years ago
Wells Fargo has a very small amount of derivatives and is NOT in the top 5 thre article talks about. Why would the Wells logo be included in the article?
James Anderson 10 years ago
$700 Trillion is a number that belongs in the "Twilight Zone". The really scary thing is when do you have to deal with reality and what will be the consequences. It has to happen someday.

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