As weak as Financial Reform bills are in the House and Senate, that's not good enough for some. The White House and Legislators want it weaker and are working under the cover of oil disaster to make it so.

UPI is reporting the conference committee has killed derivatives reform. Blanche Lincoln is the one who killed her own amendment, according to the Wall Street Journal. I guess she won her primary so it's back to business as usual.

The latest version would not force banks to spin off their swap desks, but would cordon off the derivatives operations by giving big banks two years to form affiliates to handle the derivatives bets, which are private contracts that hedge against future price changes in various securities.

Unless I'm missing something that is no change at all. SIVs are affiliates, little shell corporations, usually incorporated in the Caymans to hold CDOs and CDSes or other securities. Is there any difference between a Structured Investment Vehicle and this newly coined phrase affiliate? Looks like a duck.....

Even CNBC immediately caught the Banks are winning in destroying any meaningful or even token financial reforms.

Senator Blanche Lincoln is considering a “compromise” that will neuter her proposal to ban banks from trading derivatives by including a long delay before requiring any change to the swaps business, allowing banking regulators discretion about implementing the provision, permitting special derivatives entities to operate inside of federally supported bank holding companies, and pre-authorizing federal bailouts of the derivatives entities if they blow themselves to financial smithereens.

Meanwhile Barney Frank wants to weaken any controls on credit rating agencies. Credit Ratings Agencies were complicit by slapping on AAA ratings on junk. Seems weakening the bill is a tag team effort.

The credit-rating industry has been widely criticized for assigning rosy ratings to dubious debt offerings that imploded and brought Wall Street to its knees during the 2007-2009 financial crisis. The Senate's bill, passed last month, would set up a new government panel to eliminate perceived conflicts of interest.

But Representative Barney Frank, who heads the House-Senate conference committee, is instead pressing for a one-year study of the issue by the Securities and Exchange Commission.

That would allow credit raters to continue soliciting business directly from the businesses, municipalities and other issuers' offerings which they assess.

A spokeswoman for Democratic Senator Al Franken, sponsor of the original proposal, called Frank's counter-proposal "very concerning."

Even worse, they want to exempt private equity houses:

House Democrats also want to strike a provision that would exempt private equity funds from having to register with the SEC.

Then the big one. The Obama administration is working against derivatives reform.

President Barack Obama's Treasury Department, led by Timothy Geithner, continues to oppose the measure, Senate aides say, who add that Treasury is supporting Wall Street over Main Street by opposing the measure considered of "utmost importance" to financial stability.

"It shows the access of the major Wall Street banks in the Treasury Department in spades," one Senate aide said on the condition of anonymity. Assistant Treasury Secretary for Financial Institutions Michael S. Barr is said to be leading Treasury's efforts.

Senate aides say that more letters of support from other regional Fed presidents are on the way.

Treasury is joined in its opposition to the measure by the Federal Reserve's Washington-based Board of Governors and the head of the Federal Deposit Insurance Corporation, Sheila Bair.

Only 25 of the 8,000 banks are dealing with derivatives and would have to spin off these glorified gambling chips if this amendment was not ripped asunder after it had passed the Senate. As it was, there is no consequence for failure to comply. The derivatives reforms are being referred to as section 176, it's location in the Senate bill.

These cats called our representatives, are as slick as the oil in the gulf. They know all of the games to make you think you got somewhere, all the while doing last minute bait -n- switches.

Here is the list of other dilutions offers on compromise between the House and Senate versions of the bill.