I find it disgusting that a bank could draft an amendment that got the “push out rule” removed from Dodd-Frank. I have to say that at the outset because the rest of my comment would seem to imply an indifference to that dastardly act.



I think there are three things we want from financial regulatory reforms, namely, protecting tax-payers money from being used in bailouts, protecting consumers from financial institutions’ abuse of their power, and lastly, protecting the economy from reckless behaviour that can destabilize the financial system.



Of the three, the first two have mass appeal, good fodder for great speeches. However, it was the failure of the third that brought the financial system to its knees. Perhaps a lot has been done to address this third concern, but I have not heard much said about it.



So, there is much anger at Citi over its role in the demise of the “push-out rule”. However, while pushing derivatives out of banks may make banks safer and therefore protect depositors, these derivatives will then go to somewhere else in the system, probably somewhere less visible, less supervised. It is like squeezing a balloon; another part of the system gets overblown.The question is, what is being done to make the non-bank part of the financial system safer?

