Wall Street fears the government because the government is Wall Street's major competitor in the worthless-pieces-of-paper business.
Derivatives are not a dirty word.
Are they (derivatives) dangerous? Of course they are - so is the automobile. Every year 50,000 people are killed in automobile accidents in the U.S. Does that mean we shouldn't have cars? Of course not.
You can't legislate stupidity.
The concept of derivatives stems back at least to the Bible. In Genesis, God began creation by separating light from darkness. Without too much hyperbole, to limit derivatives is to limit creation.
"Corporations make good and bad decisions every day" offers one dealer. P&G made a bad decision. But if they came in with a Pampers line that flopped, you wouldn't have hearings in Congress, would you?
I have yet to see a 3,500 person bureaucracy - no matter how well-meaning - which is more responsive to innovation and market needs than a 500-person agency.
The development of more black letter law is not necessarily the way forward. By the time such law is passed, the markets would most probably have moved on.
The incident [Barings' failure] in one sense quells the cacophony for greater regulation of the OTC markets, in that it occurred in an exchange-traded product area and in a location that is probably one of the most regulated financial environments in the world (the other being the U.S.).
Most people know that Congress has evaded having to define what is a "futures contract" or an "option" for the past 75 years (the earliest legislation was in 1922). Instead it has been left to the courts to separate these instruments from others more fortunate to have been spared regulation. Placing this burden on legally trained jurists, many of whom chose a legal career precisely because of poor performance in college courses on finance and math, is like using butchers as brain surgeons.
The attitude here is that derivatives have on the whole, been a tremendously positive force around the world. In all these countries they impose market discipline and force supervisors to rethink their rules and regulations. You have to be more careful in how you do your supervisory work but the benefits, by a strong margin, outweight the costs.
It's a simple equation. The more flexible a market is, the more liquid it will be. The more restricted it is the less liquid it's likely to be.
The CFTC was established in 1975 to monitor the 82 different futures bought and sold at eight different U. S. exchanges and to insure that a majority of speculators lose money in an orderly, reasonable, and efficient manner."
The cost of arbitraging regulations has done down so much that it is hard to know how to stuff the genie back into the bottle.
I don't know what I can do, but I do sit on the Armed Services Committee and maybe I can do something about the CFTC with a B-52 Bomber.
Bankers prefer to be left alone to do what they want. If the regulators get too heavy handed, a lot of banks may simply decamp to Paris or Frankfurt or Singapore or Liberia, or wherever will offer them good telephone connections, decent restaurants and, above all, relaxed regulation.
The government announced that it's no longer going to issue 30 year bonds. What better way to inspire confidence in our government than by saying "We might not be around that long."
Jay Leno
The Tonight Show
November 1, 2001
You are probably wondering how it is that multibillion-dollar corporations with highly paid business school graduates populating their corporate risk-management departments could have failed to anticipate price fluctuations in the electricity market and entered into long-term contracts. The answer is: Remember what I said about screw-ups this big. California actually prohibited utilities from entering into long-term contracts. ... In the mainstream media, this is known as "deregulation."
Ann Coulter
How to Talk to a Liberal (If You Must)
2005, p. 159
Last updated: January 9, 2011