The Whale Room At The Big Casino

In Vegas parlance, the biggest gamblers are called "whales":  they drop six-figure bets, have lines of credit, are treated like royalty by the staff, and blow a whole weekend gambling what would be an entire lifetime's worth of earnings for a regular American.  The financial world equivalent of the whale room at the biggest casino of them all?  The derivatives kings of Wall Street.

On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan.

The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.

Drawn from giants like JPMorgan Chase, Goldman Sachs and Morgan Stanley, the bankers form a powerful committee that helps oversee trading in derivatives, instruments which, like insurance, are used to hedge risk.

In theory, this group exists to safeguard the integrity of the multitrillion-dollar market. In practice, it also defends the dominance of the big banks.

The banks in this group, which is affiliated with a new derivatives clearinghouse, have fought to block other banks from entering the market, and they are also trying to thwart efforts to make full information on prices and fees freely available. 

Why let anybody else into the club?  More derivatives dealers means more competition and less margin for the trading houses.  And these are the true "whales"...they buy and sell the American economy.  This shadow market is worth hundreds of trillions of dollars...and everything else is just background noise.  And since the meltdown two years ago, the entire derivatives machinery is controlled by a handful of banks who have locked everyone else out.

The Justice Department is "looking into it" of course.  But you're mad if you think anything will happen.

There's just too much money involved.