Fighting Derivatives Regulation


“Brooksley Born, the former U.S. commodities regulator who lost the fight to police over-the- counter derivatives a decade ago, said the banks that caused the financial crisis are trying to stop the overhaul of the market.

“Special interests in the financial-services industry are beginning to advocate a return to business as usual and to argue against any need for serious reform,” Born said today as she accepted a Profile in Courage award from the John F. Kennedy Library. If changes aren’t made “we will be haunted by our failure for years to come,” she said.

As the chairwoman of the Commodity Futures Trading Commission in 1998, Born warned that the unregulated contracts posed a serious danger to the global financial system and moved to address changes in how swaps based on interest rates, commodities or currencies were traded. She was stopped by Alan Greenspan, Arthur Levitt and Robert Rubin, who all argued the market could regulate itself.

Lax oversight contributed to the failures last year of Lehman Brothers Holdings Inc. and American International Group Inc., leading to the seizure of credit markets and causing more than $1.4 trillion in writedowns amid the worst financial crisis since the Great Depression. Treasury Secretary Timothy Geithner has promised that the U.S. will for the first time regulate over-the-counter derivatives, which are a major source of bank profits.”

And the nation of sheeple, briefly disturbed from their somnolence, returned to watching American Idol . . .

Originally published at The Big Picture and reproduced here with the author’s permission.

4 Responses to "Fighting Derivatives Regulation"

  1. Dan   May 29, 2009 at 6:07 am

    Wow, I don’t remember so much spam ever being on this site.

  2. Bob Freedman   May 30, 2009 at 8:31 pm

    Apparently, the sheeple will swallow whole the “In Goldman We Trust” policy.American Idle …

  3. Guest   June 1, 2009 at 11:33 am

    What this really shows is the banks are playing hard ball, and the administration is barking back with reg propositions.There must be something behind the curtain that the house/Senate want the banks to do. Like lessen the tight not on the credit squeeze like you mentioned in the article.The economy seems to be on a slight improvement, maybe it is time to consider or at least reconsider some regs, but maybe the regs written in 2007 that didnt get the envelop can be filtered and pass the necessary ones. Level headed regulations instead of fear and hasty ones.