Wall Street regulators have caved in once-again to the demands of Wall Street lobbyists, softening a crucial rule that would continue to allow a handful of big banks to control the risky derivatives market.

The derivatives market, which factored so largely in the 2008 economic collapse, is worth $700 trillion and allows companies to both speculate on the market, or to protect other risks (which is why you end up with that domino-like September in 2008).

The new regulation, which would have made more public these shady exchanges that usually occur between only one or two large banks, has been softened now to the point that observers worry we have returned to “precrisis status.”

“The rule is really on the edge of returning to the old, opaque way of doing business,” Marcus Stanley, the policy director of Americans for Financial Reform, a group that supports new rules for Wall Street, told the New York Times.

The regulation was part of the sweeping Dodd-Frank Act of 2010, which looked to regulate Wall Street (Haha, laughed Wall Street). Two-thirds of the rules that the Act mandated have yet to be written, and some, like this derivatives regulation that would essentially bring a dark practice into the light, have been softened to the point of ineffectiveness.

“The banks have all these ways to reverse the rules behind the scenes,” Mr. Stanley said.

Ways like massive lobbying campaigns (they held more than 80 meetings with regulators about derivatives over three years), stacking the agency with former lobbyists (which the Obama administration seems more than happy to do), or just forcing the agency to water down the legislation so its virtually useless.

And then I guess the blame will be put on the regulators when this whole thing collapses again?