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May 14, 2009

Obama Seeks New Regulation of Derivatives
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The Obama administration is proposing new regulatory powers over
derivatives, the complex financial instruments that played a major role
in the nation’s economic collapse. Derivatives include credit default
swaps, the controversial insurance contracts that led to the government
bailout of insurance giant AIG. The White House wants new rules that
would have credit default swaps traded on public exchanges and backed by
existing capital. On Wednesday, Treasury Secretary Timothy Geithner said
the proposals would bring urgently needed oversight.

Treasury Secretary Timothy Geithner: “Part of our approach will be not
just getting the better rules, more sensible rules, more conservative
rules across—risk taking across the financial system, but a cleaner,
more simple, more consolidated oversight structure so that there’s less
opportunity for arbitrage. It’s less easy for risks to just migrate
around and move around the parts of the system where regulation is
carefully designed.”



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