According to today’s Wall Street Journal, banks such as JP Morgan, Morgan Stanley and Citibank are again creating synthetic collateralized debt obligations, the risky investment vehicles that precipitated taxpayer-backed bailouts in 2008.

Synthetic CDOs pool and slice various securities, with the riskiest tranches providing the highest return. In theory, these vehicles are supposed to buffet investors from risk by spreading it around. But as banks filled synthetic CDOs with worthless securities in the run-up to the 2008 economic crisis, the risk was instead multiplied dramatically, putting the American economic system on the brink of collapse.

Making matters worse, the new synthetic CDOs are in London, the “global center of derivatives trading.” London, home to the infamous London Whale and so many other blowups that U.S. taxpayers have had to pay for. U.S. regulators must take immediate action to curb the abuses of Wall Street, starting with the CFTC’s proposed cross-border derivatives regulation. As we point out in our comment letters, the CFTC’s proposal would go a long way toward protecting American taxpayers from the types of risky behavior that started outside U.S. borders before bringing the crisis to Main Street 5 years ago.