Banks Hire Derivatives Expert To Fight Financial Reform

Several major banks are fending off legislation meant to regulate the lucrative derivatives market by hiring a high-powered financial lobbyist.

The Hill reports that Edward Rosen, a partner at the Cleary Gottlieb firm, has played a key role in derivatives legislation as Congress hones in on regulating the multi-billion-dollar market. Cleary Gottlieb reported close to $1 million this year lobbying for work on the derivatives market, and according to third-quarter lobbying disclosure reports, Rosen has worked in recent months for financial behemoths like HSBC Securities, Wells Fargo, Deustche Bank, Citigroup and Bank of America Securities.

A little more on Rosen from Cleary Gottlieb's Web site:

Mr. Rosen has served as counsel to the Securities Industry and Financial Markets Association, the Securities Industry Association, the Futures Industry Association, the International Swaps and Derivatives Association and The Bond Market Association.

From The Hill:

"This guy is considered the bee's knees of knowing the inside-out of derivatives," said a financial-services lobbyist. Rosen wrote a two-volume book on derivatives legislation and has spent years working on derivatives law and lobbying. A spokeswoman for Cleary Gottlieb declined to comment.

The House could vote on derivatives legislation, which would give new powers to the Securities and Exchange Commission to regulate the market, as soon as the first week of December.

The Huffington Post reported last month that trading in the unregulated $600 trillion market was partially to blame for spurring last year's financial meltdown.

More than 1,100 banks now trade in derivatives and four banks control the market: JPMorgan Chase, Goldman Sachs, Bank of America and Citibank, according to bank regulator the Office of the Comptroller of the Currency. The Hill reports that commercial banks in the US reported a record $9.2 billion in revenue on derivatives in the first quarter of the year and $5.8 billion in the second quarter, which are the most recent figures available on the market.

Comments

[autumncolors]

11:27 AM on 11/08/2009

Derivatives and Wall street day trading should be banned.

[autumncolors]

11:26 AM on 11/08/2009

Can somebody please explain to me why everybody does not get the same APR rate on their loans, cc etc? These are just games which the banks play to make huge profits.

So banks take a risk on those with poor credit. Why do the consumers have to pay for that risk?

[Steve Gilmore]

11:39 AM on 11/08/2009

More importantly, is why do we insure them? Would they be making such risky endeavors if they were not insured by the American taxpayer? (probably what you were referring to)

[Corners]

08:41 AM on 11/11/2009

What i dont get is why the government lends these banks money at virtually 0%. Then they turn around and kick our rates up to 30% regardless of credit history or any other factor. If i went and started making loans to random people at 30% id be labeled a loan shark. Why does corporate America have different rules then our citizens? If i do something wrong i have to admit guilt to get a softer sentence and go to jail. A corporation guess to pay a bribe, and because they offered to pay a bribe(settlement) they don't have to admit guilt or go to jail

[mamacat]

01:55 AM on 11/08/2009

Disgusting. If these guys make money legitimately, they should get out of the banking industry, and take up residence in a detention facility.

[totaldisbelief]

12:40 PM on 11/07/2009

so once agian Truth and Beauty will go to the Highest Bidder.

[MotownLinda]

10:32 AM on 11/07/2009

I wonder if Mr. Rosen might consider leaving the "dark side" and joining the SEC to help craft legislation that will stop this madness? It's obvious that Congress, Bernake, the President and everybody else do not really understand these complicated types of financial instruments, and we need somebody to help us who can outwit the "best and the brightest" Wall Street has. If Congress does finally outlaw the current types of derivatives, the evil geniuses on Wall Street will come up with something even more complicated and more lucrative. The Bad Guys will always be one step ahead of us unless people like Mr. Rosen join the Good Guys and help us. I am starting to be really afraid that the Great Depression will pale in comparison to what will happen to us if these greedy, heartless people are allowed to continue doing what they're doing.

[US1st2009]

08:45 AM on 11/11/2009

Rosen is addicted to money and it's power so no, he will never leave the dark side. it's also a ruse spread by the finance industry that smart people like Obama can't understand "financial engineering." kinda like residents of a beautiful place telling outsiders it's miserable so they won't visit. any smart accountant can follow the money like a blood hound.

[schatsie]

10:22 PM on 11/06/2009

heck they could hire the LONG TERM CAPITAL MANAGEMENT people....you know the Nobel prize winner in economics..... and then we could have another Big Bailout for the Pampered and Priivileged....

[research]

07:59 PM on 11/06/2009

Outlaw all Derivatives! We have done it before, and the economy always does better.

Who wouldn't want to get CDS investment insurance fraudulent without reserves, to gamble on super risky derivatives bets, backed by the US taxpayer?

Heads I win, Tales, you pay.

That's why the Banksters hate Main Street, and love gambling.

Outlaw Derivatives and Force Wall street to invest in Main Street.

Better yet, increase the stimulus to WWII level of about 5Trill for rooftop solar and waste biochar, thus getting us off fossils and nukes and eliminating the need for Energy Wars. see my profile for deti8als.

[sonofsamphm1c]

02:12 AM on 11/07/2009

What is collateral?

[research]

01:47 PM on 11/07/2009

guessing at what you are asking:

There is no collateral for CDS investment insurance, that's why the taxpayers were extorted to pay them up. That's why CDS is fraud.

[PPatt]

04:02 PM on 11/06/2009

Does anyone know whether I can purchase derivatives to offset the risk of this derivative reform effort being successful?

[factotem]

12:57 PM on 11/06/2009

derivatives expert = oxymoron

[Stop the bail]

12:16 PM on 11/06/2009

Woo hooo I love job less recoveries..10.2% unemployment and the stock market is up anyway. I'm sure all the millions of unemployed would feel relieved to know the economy is finally growing even if there won;t be any jobs available to them due to outsourcing/insourcing technological efficiency, or greedy employers.
http://financeopinionss.blogspot.com

We need a 2nd stimulus devoted only to JOBS

[MayorQuimby]

03:50 PM on 11/06/2009

It's not 10.2%. That's only people on INITIAL benefits. Doesn't include:

Extended benefits
Exhausted benefits
Freelancers
Small-business owners
Temp workers
Waiters/waitresses/bartenders

The truth is around 17.5%. And that's the number they USED to use so for comparisons with the 1982 recession or the Great Depression, you should use the U-6 number of 17.5%

[sonofsamphm1c]

02:15 AM on 11/07/2009

The truth is it was never 4.6%, but that is what was claimed. The 10.2 is comparable with the 4.6%. Your number is not.