The gun show loophole goes something like this:
The Gun Control Act of 1968 requires anyone in the business of selling guns to obtain a federal firearms license (FFL) and keep a record of their sales. However, this law does not cover all gun sellers. If a supplier is selling from his or her private collection and the principal objective is not to make a profit, the seller is not "engaged in the business" under the GCA, and thus is not required to have a license. Because they are unlicensed, these sellers are not required to keep records of sales and are not required to perform background checks on potential buyers, even those prohibited from purchasing guns by the Gun Control Act.
Most all of the vendors at gun shows nowadays, given the liability concerns, are licensed gun dealers, i.e. not within the category of persons targeted by the "Gunshow loophole". As licensed dealers, they are bound by the background check requirements imposed under the GCA.
Clearly there is a problem, but Im not sure how to address it. Should there be legal requirements controlling how an unlicensed individual disposes of his handguns? If I want to sell my 9mm pistol to my neighbor, should I be burdened with obtaining background check forms, figuring out how to submit them, where to submit them, etc? Maybe ... maybe not. I can tell you for sure I dont think the government has a right to know where each and every handgun in the country is - thats a little too much info for big brother. If we had some type of legislation that required purging of background check results that were approved, I might buy on to that - but any records that are kept and/or archived - no thanks.
Nim