Banks lobby to keep regulations light

WASHINGTON, June 1 (UPI) -- A new bank lobbying group, the CDS Dealers Consortium, has proposed derivatives trading continue under the same regulator, a confidential memo said.

The memo, dated Feb 10, has circulated through the U.S. Treasury and mirrors the Treasury's recent plan that calls for the derivatives trading to be managed through a clearing house, as opposed to an exchange, which would require more transparency and specificity regarding valuation, The New York Times reported Monday.

Banks argue that derivatives should stay under oversight of the Federal Reserve Board, which critics say has been too lenient in the past.

Derivatives, a $600 trillion market, were largely responsible for undermining American International Group, which has required $180 billion in federal bailout funds to stay afloat.

"The banks want to go back to business as usual ... and they have a lot of audacity now that everyone has bailed them out," said Yra Harris, a commodities trader who was involved in a failed effort to regulate the market nine years ago, the Times said.

The banks hired Edward Rosen, a partner at the law firm Cleary Gottlieb Steen & Hamilton, who has been on the winning side of the derivatives regulation arguments in the past.