Aug. 12 (Bloomberg) -- President Barack Obama sent Congress his plan to rein in the $592 trillion over-the-counter derivatives industry...
Go on. Go on.
...The proposal issued yesterday would pressure derivatives users such as banks and hedge funds to move away from opaque customized contracts by imposing higher capital and margin requirements on the instruments. Standardized derivatives would be moved to regulated exchanges or trading platforms and sent through official clearinghouses, according to the draft measure. ....
Check. Sounds nice. Keep going...
Custom derivatives are more profitable than contracts traded over an exchange, so the dealers will work to get the legislation “watered down,” Miller said. The derivatives proposal is part of a broader overhaul of financial industry rules meant to prevent a repeat of last year, when the collapse of Lehman Brothers Holdings Inc. and American International Group Inc. froze credit markets.
You don't say! And why did we, the wronged taxpayers bail them out again?
“These markets have largely gone unregulated since their inception,” the U.S. Treasury said in a statement yesterday.
Hmmmm....very fascinating. Fascinating indeed. This is an astonishing discovery.
“Enormous risks built up in these markets -- substantially out of the view or control of regulators -- and these risks contributed to the collapse of major financial firms in the past year and severe stress throughout the financial system.” ...
So the $592 Trillion dollars was just substantially "out of view" or "out of control" of the regulators? I see. That $592 trillion dollars could easily get lost in a haystack. Any Auditor from a Big 4 would be the first to tell you that trillions of dollars could be anywhere on the equity section... could those unsecured values be hiding under the mattress? In the closet? It's so easy to lose track of trillions. I do that every week at my ATM. My banker loves me for it. i should lose another trillion so I qualify for a government approved bailout!
The CFTC was extraordinarily cautious, ethical and effective in the last 10 years in preventing the greatest financial scandal of the history of the world!!! They must be very good.Pickel and Gensler deserve a promotion. Oh wait!!! Obama just gave them one. Obama is expedient.
...The draft legislation would require the Securities and Exchange Commission and the Commodity Futures Trading Commission to set capital and margin requirements for non-bank swap dealers and “major swap participants” that are “as strict or stricter” than those set for U.S. depository institutions by federal bank examiners, according to the proposal. ...
The annoying part about economics is that it's such a subjective science. Imagine if your doctor diagnosed you for a brain tumor using subjective scientific method to make his conclusion. Would denial of a brain tumor cease the patient from dying? Because this is exactly how the scientific method being applied to revive the American economy. I get warm fuzzies just thinking that our livelihood is being taken seriously by such caring, ethical and capable experts!
Derivatives are contracts used to hedge against changes in stocks, bonds, currencies, commodities, interest rates and weather. Credit-default swaps are derivatives created primarily to protect lenders and bondholders from company defaults.
THANK YOU BLOOMBERG!!! THANK YOU!
Please call them subprime instruments, credit defaults, CMO's or CLO's from now on. Any financial instrument secured by another financial instrument with the capacity to hedge is a derivative. They're not all subprime trash.
BTW, Hedge Funds are not the only investors of Subprime garbage and the Subprime junk isn't the only thing invested by Hedge Funds.
Lawmakers still need to decide how to split oversight and enforcement between the SEC and CFTC.
Opaque financial products, including some derivatives, contributed to almost $1.6 trillion in writedowns and losses at the world’s biggest banks, brokers and insurers since the start of 2007, according to data compiled by Bloomberg.
Dawn Kopecki called them "derivatives" again. Arrrrgh!!! BTW, this is the same CFTC that "overlooked" a $592 trillion derivative market that accumulated $4 quadrillion in trades since it's inception.
Hey Obama, nice jobless "economic recovery". Boomers, please do everything to vote the following criminals out of office; Obama, Boxer, Frank, Gramm, Leach and Bliley. And why aren't any of the CEOs of the failed banks (like AIG) tried for fraud and imprisoned yet? When is Paulson, Bush and the others going on trial for the greatest financial scandal in the history of the world?
Boomers, since you have the largest number of voters, you're the ones with enough numbers to have this problem fixed. Neglect it, you're guilty of the crime as well and your children might as well wait in anticipatino for your passing in order to afford a home to raise our families in. Thank you for understanding!!
And don't demand another bailout when this "recovery" falls through the floor. The "mob" at the healthcare scene is just a hidden glimpse of the anger at the bailouts we've seen last fall.
Again, my peeve is with our "elected officials", not necessarily with Dawn Kopecki of Bloomberg News. We don't kill the messenger here.