The New York Times outlines what happens when you do not get financial reform, especially on derivatives. In Secretive Banking Elite Rules Trading in Derivatives, we have details on how 9 representatives, from the Banksters, control and lock out the derivatives market, now through a new clearing house called ICE Trust. That's our usual suspects, Goldman Sachs, JPMorgan Chase, Morgan Stanley, UBS....

The details of their meetings, even their identities, have been strictly confidential.

It's like no limit poker and only a few are allowed to play, with too big to fail built into the game. One goes down, they bring the entire nation down with them.

The banks in this group, which is affiliated with a new derivatives clearinghouse, have fought to block other banks from entering the market, and they are also trying to thwart efforts to make full information on prices and fees freely available.

The little guy, those trying to use derivatives to hedge on commodities, like heating oil, cannot find out if they could have locked in lower prices. Why? Banks don’t disclose fees associated with the derivatives being bought and sold.

Banks collect many billions of dollars annually in undisclosed fees associated with these instruments — an amount that almost certainly would be lower if there were more competition and transparent prices.

An amendment just passed the Senate which allows regulators to assign a credit rating agency to evaluate asset based securities. To date, the ones hiring the credit rating agencies are the ones making up these fictional derivatives.

That said, we have this New York Times article reporting more investigations of banks, but this time trying to find evidence the poor little ole' credit ratings agencies were just played as suckers by the banks (cough, cough):

The New York attorney general has started an investigation of eight banks to determine whether they provided misleading information to rating agencies in order to inflate the grades of certain mortgage securities, according to two people with knowledge of the investigation.

Since ratings models were available to the ones creating the structured finance product, in this case, credit default obligations (CDOs), issuing firms could analyze the ratings methods to figure out where to hide the toxic, worthless crud contained within, yet still land a AAA rating.

What a surprise. A non-bank coalition is trying to gut derivatives reform. Hold onto your iPhone, that's right, Apple is among them. Seems they don't want to put up real money to cover their bets. There is some speculation that this end users coalition has actually been orchestrated by the dealers, the mega banks themselves.

Here is what the Huffington Post says is the meat of the lobbying gut efforts. Unfortunately the actual letter is not available.

• Deleting provisions in the current Senate bill, authored by Banking Committee Chairman Christopher Dodd (D-Conn.) and Agriculture Committee Chairman Blanche Lincoln (D-Ark.), that call for swaps dealers, like JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup, Morgan Stanley and Wells Fargo, to hold higher amounts of capital to support their derivatives bets;
• Deleting a term defining major derivatives users, which calls for higher capital requirements and mandates that they clear their derivatives deals through transparent venues that require parties to post margin. By deleting this provision, the coalition wants to exempt an entire class of derivatives users from having to post cash upfront to support their bets.