Obama's insistence on addressing derivatives — and the sense shared by lobbyists on all sides of the issue that derivatives will inevitably fall under greater scrutiny of some kind — represents a remarkable turnaround.
A dozen years ago, President Bill Clinton, Federal Reserve Chairman Alan Greenspan and Congress all opposed government oversight of derivatives. A law enacted in 2000 made it clear that most derivatives could not be regulated. Derivatives serve a legitimate purpose in hedging risks and there was concern at the time that imposing too much regulation would put the U.S. out of line in what is truly a globalized market.
Some of those worries remain valid. Still, the former consensus against regulation has flipped around almost entirely. Derivatives are widely viewed as a key contributor to the near-collapse of the financial markets in 2008. It's clear that any financial overhaul bill that clears Congress this year will impose new restrictions on derivatives trading.
Read more
No comments:
Post a Comment