You do not have to regulate derivatives, you just need to make it illegal for our government to bail out the companies that sell them.
Problem solved.
They didn’t get bailed out because the Gov decided to make it rain with newly printed FedReserve notes. They got Bailed out because there was a risk of massive pain to the countries especially to US, otherwise. Now, one can debate was that risk overblown or not. However its obvious that missive failures would not be good for all citizens of US. If a farmer bought a future from Goldman as CP to sell wheat for X amount of dollars per bushel. and Goldman goes bankrupt, then that Farmer is screwed,and goes bankrupt too,so you not getting a bread in the store. Thats how wall street affects main street,etc..