The government’s top securities regulator called Thursday for Congress to impose new oversight on financial derivatives, warning that allowing risky instruments like credit default swaps to continue unfettered could bring further economic damage.
The chairman of the Securities and Exchange Commission, Mary Schapiro, said banks that deal in the swaps must be subject to rigorous requirements for holding capital. They must also conduct their business in accordance with rules and their price information must be transparent, she said.
Schapiro made the statement as credit default swaps, a form of insurance against loan defaults, have come under heightened scrutiny in the U.S. and Europe.
The leaders of France, Germany and Greece have called for a clampdown on trading in the swaps, which they blame for worsening Greece’s debt crisis and undermining the European currency in recent weeks. A nationwide strike in Greece to protest the cash-strapped government’s austerity measures – the second strike in a week – brought the country to a virtual standstill Thursday.
Another U.S. regulator, Commodity Futures Trading Commission Chairman Gary Gensler, said Wall Street banks are seeking exemptions to the proposed new regulations for derivatives that could shield more than half the trades that should be subject to disclosure. Gensler criticized Wall Street’s stance on proposed oversight for the shadowy $600 trillion market for derivatives – blamed for hastening the 2008 financial crisis.
Read more here: http://www.huffingtonpost.com/2010/03/12/credit-default-swaps-sec-_n_496764.html
