“When the Dodd-Frank financial reform law passed in 2010, President Obama said it would “lay the foundation for a stronger and safer financial system.” But that won’t happen if the senators from New York, Charles Schumer and Kirsten Gillibrand, have anything to say about it.

Recently, Mr. Schumer, Ms. Gillibrand and four other Democratic senators wrote to the Treasury secretary, Jacob Lew, seeking his help in shelving crucial ‘cross-border’ guidelines on derivatives from the Commodity Futures Trading Commission. The guidance makes it clear that numerous new derivatives rules under the Dodd-Frank law apply to foreign affiliates of American banks and to foreign banks operating in the United States.

Without strong cross-border rules, derivatives regulation will be meaningless because big American banks that dominate the global market in derivatives will simply engage in risky trades and rank speculation abroad. When those risks and wagers go wrong, American institutions and American taxpayers will be on the hook — again.

In the letter to Mr. Lew, the senators say that to avoid confusing the banks, the C.F.T.C. cross-border guidelines should not take effect until the Securities and Exchange Commission completes a separate set of derivatives rules. That is ridiculous. The C.F.T.C. oversees virtually all of the multitrillion-dollar derivatives market; the S.E.C. a relative sliver. The C.F.T.C. has diligently issued its required rules under the Dodd-Frank law over the past three years and has set a deadline of July 12 to put the cross-border guidelines into effect. The S.E.C. first got around to issuing a pathetically weak derivatives proposal in May.”

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Read the full New York Times editorial here