The New York Times posted a long and important story by Gretchen Morgenson and Don Van Natta yesterday discussing the derivative industry's sneaky lobbying campaign to prevent effective regulation of their profitable scam. It notes that the flaws in the Obama Administration's proposal to regulate derivatives appear to track nicely with the industry's desires.
Over-the-counter derivatives, recall, are the secret betting slips reckless bankers and insurance companies write among themselves, paying themselves massive fees for their "work" while inflating the amount of money (called "notional value") in a given market to ridiculous levels-at last count some $600 trillion was tied up in derivatives. (That's about 100 times the value of all wages, salaries, bonuses, interest and investment income earned globally.)
I wrote about Treasury Secretary Tim Geithner's proposal here a couple of weeks ago, and mentioned that the proposal would only apply to "standard" contracts-while these bankers will consider everything they do a custom job.
The Times expands on that theme smartly, quoting Sen. Tom Harkin of Iowa to good effect.
It's a good piece, and worth a read for the details. Morgenson and Van Natta obtained a memo from Edward J. Rosen, the key lobbyist (paid $430,000 so far, for four month's work) which discussed the derivatives traders' successful hijacking of the nation's policy.