Eric Holder, Wall Street Double Agent, Comes in From the Cold (RollingStone - July 8 2015)

[think]

18. That's for sure. Millions of Americans lost their jobs and/or homes in the last economic meltdown

And while we are still trying to recover from the devastating effects of that mess Goldman Sachs and other too big to fai banks are already utilizing a "loophole" in Dodd-Frank to offshore derivatives to avoid regulation.

The wording used to create the loophole was added to an amendment created Gary Gensler, ex Goldman Sachs partner and top economic adviser for Hillary Clinton:

U.S. banks moved billions of dollars in trades beyond Washington’s reach

By Charles Levinson

Filed Aug. 21, 2015, 2 p.m. GMT

The story of how Wall Street’s giants got around derivatives rules imposed by the CFTC after the financial crisis. The fix: tweaking contracts and shifting deals offshore.


“We saw strange things in the data,” said Chris Barnes, a former swaps trader now with ClarusFT, a London-based data firm.

The vanishing of the trades was little noted outside a circle of specialists. But the implications were big. The missing transactions reflected an effort by some of the largest U.S. banks — including Goldman Sachs, JP Morgan Chase, Citigroup, Bank of America, and Morgan Stanley — to get around new regulations on derivatives enacted in the wake of the financial crisis, say current and former financial regulators.

The trades hadn’t really disappeared. Instead, the major banks had tweaked a few key words in swaps contracts and shifted some other trades to affiliates in London, where regulations are far more lenient. Those affiliates remain largely outside the jurisdiction of U.S. regulators, thanks to a loophole in swaps rules that banks successfully won from the Commodity Futures Trading Commission in 2013.

The products affected by that loophole include some of the most widely traded financial derivatives in the world – such as interest rate swaps, where a bank takes a fee for exchanging a variable-rate interest payment for a fixed rate with a client, and credit default swaps, a sort of insurance where one party, often a bank, agrees to pay another party in the event of a bond default.

~Snip~

Gensler and his staff tucked a 17-word insert into a 228-page amendment to the Dodd-Frank bill. The addition seemed to assure banks that the new derivatives rules wouldn’t apply to their overseas trading operations. Bachus backed off. But the insert was craftily worded to leave wiggle room. If those activities “have a direct and significant connection with activities in, or effect on, commerce of the United States,” then the rules would apply, Gensler’s addition read....

Read more:
http://www.reuters.com/investigates/special-report/usa-swaps/