This removes the "Too big to Fail" from American financial lexicon? Nope. The global financial system is too interconnected. A derivative written, regardless of its origin, influences the entire global financial system through interconnected counter party risk. If one part of the daisy chain goes, the entire system will still be affected. One solution is to standardized, list, and clear all derivative trading. Bear in mind that standardization carries numerous drawbacks and little support from powerful interests.
Lawmakers shook hands on the compromise legislation at 5:39 a.m. after Obama administration officials helped broker a deal that cracked the last impediment to the bill -- a proposal to force banks to spin off their lucrative derivatives trading business.
Source:
finance.yahoo.com
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