Here come the Banksters. It was not enough that so called financial reform is Swiss Cheese legislation, full of loopholes. What regulation is left, the banks are going after and seemingly with help from the Government.

Who is their biggest cheerleader? Why, Federal Reserve Chair, Ben Bernanke. From a regulation speech in Chicago:

No one’s interests are served by the imposition of ineffective or burdensome rules that lead to excessive increases in costs or unnecessary restrictions in the supply of credit. Regulators must aim to avoid stifling reasonable risk-taking and innovation in financial markets, as these factors play an important role in fostering broader productivity gains, economic growth, and job creation.

According to Reuters, Goldman Sachs is having a freak out over the Swiss Cheese Financial Reform bill.

Goldman Sachs Group Inc (GS.N) has just a few more months to put its stamp on the Volcker rule, and it is not wasting any time.

The rule, designed to limit banks from speculating with their own money, will cost Goldman at least $3.7 billion in annual revenue, by one estimate. And billions more could be at stake if regulations now being drawn up are extra-tough.

The Volcker rule was one of the main topics on the agenda when Chief Executive Lloyd Blankfein met recently with U.S. Securities and Exchange Commission Chairman Mary Schapiro.

Here's the money quote, brought to you by Reuters:

"They're totally freaked out about Volcker," said a Goldman lobbyist who declined to speak on the record for fear of losing the contract. "People are working on that a lot, with agency staff, with lawmakers, you name it."

Under the cover of Friday 5pm press releases, Treasury Secretary Tim Geithner exempted a $30 trillion derivatives market, FX swaps and forwards, from oversight and regulation.

Today the Federal Reserve is unsure what information to release on bank stress tests:

"We haven't yet come to an internal view" on how much information to disclose, Bernanke told a banking conference at the Chicago Fed.

The Fed must balance the "legitimate" business interests and privacy concerns of banks against the legal mandate to give the public a better view into bank safety and soundness.

This is that scrutiny the Fed is supposed to administer on institutions with assets greater than $50 billion.

We have meager attempts at stopping this train wreck in the form of civil lawsuits. Today, AIG, Goldman Sachs and Deutsche Bank were sued for bail out loans, yet the Federal Reserve, who bailed AIG out, is not listed in the lawsuit.

A.I.G. and two large banks engaged in a variety of fraudulent and speculative transactions, running up losses well into the billions of dollars. Then the three institutions persuaded the Federal Reserve Bank of New York to bail them out by giving A.I.G. two rescue loans, which were used to unwind hundreds of failed trades.

Naked Capitalism asks if anything will come about from the AIG lawsuit and notes the bail out circle jerk system.

The various disclosures of how the Fed lent against pretty much anything the banks could round up, including defaulted securities, is troubling. Defenders of the central bank argue no harm was done since the securities have recovered from crisis lows (well save the ones that went to zero). The problem is that the logic is circular. In many cases, the value of the securities now depends on the fact that the Fed is willing to lend at super low interest rates. So the “market” values are fictive and dependent upon Fed intervention, which is coming at the expense of savers. The interdependence between the Fed’s rescue facilities and its continued interventions is given a free pass, but those of us who are not at the top of the food chain are continuing to pay the cost.

The Fed also mentioned international finance systems and reforms, but there are no real specifics. It appears our Banksters and Lobbyists were not satisfied with the little actual reform we got. They are bound and determined to enact the same old derivatives gambling hall which got us in crisis in the first place.

Oh yeah, the financial sector, banks which were bailed out, are now even bigger, which means systemic risk just turned into Godzilla.