Brooksley Born, former Chair of the Commodities Futures Trading Commission, warned Congress of the need to regulate over-the-counter derivatives 10 years before the 2008 financial meltdown. Isn't it about time (2009) to regulate as she suggested?
by 
palmagma
ANSWERS: 2
-
Yes, such regulation is now (NOV 2009) still dangerously overdue! - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Former Federal Reserve Chairman Alan Greenspan admits he was wrong about the need for over-the-counter (OTC) derivatives market transpency and regulation. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Warren Buffett has called OTC derivatives "financial weapons of mass destruction". - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - An October 2009 Frontline documentary titled "The Warning" described Born's failed efforts to regulate and bring transparency to the secretive derivatives market, and noted the continuing resistance to reform. The program concluded with Born sounding another warning: "I think we will have continuing danger from these markets and that we will have repeats of the financial crisis -- may differ in details but there will be significant financial downturns and disasters attributed to this regulatory gap, over and over, until we learn from experience" http://www.nytimes.com/2008/10/09/business/economy/09greenspan.html
-
No. It is not the OTC derivatives that are the problem. It is the banks that were being subsidized by the government that were investing in them. There is nothing inherently wrong with a high risk investment. There is, however, something wrong with banks that are "too big to fail", and thus guaranteed not to, investing in them. This is just another red herring put out by the rich bankers. If their investments go good they become rich and are called wise, if they go bad, well they should have regulated the derivatives. It's a win-win situation for them. Don't fall for the scam.
RELATED QUESTIONS
Copyright 2023, Wired Ivy, LLC