Regulating Derivatives: A Major Battle In Financial Reform

Prohibiting banks fro working with derivatives is one way of preventing financial institutions that are "too big to fail." It would prohibit the institutions that hold consumers' money from making risky bets with that money, out of sight of the consumer. But it could also push derivative markets overseas, if no other U.S. institution steps up to deal with derivatives.

Some Republicans have supported this kind of financial reform; other Republicans say it will kill an industry that is a vital cash supply for American financial firms and consumers. The House passed financial reform late last year without any Republican support.