Back to Business – Banks Dig In to Resist New Limits on Derivatives – Series – NYTimes.com.
The looming fight over regulation is the beginning of a broader debate over the future of the financial industry. At the center of the argument: What is the right amount of regulation?
Those who favor more regulation say it would offer early warning signals when companies take on too much risk and would help avert catastrophic surprises like the huge derivatives losses at the giant insurer the American International Group, which has so far received more than $170 billion in taxpayer commitments. The banks say too much regulation will stifle financial innovation and economic growth.
The price tag for AIG alone justifies federal regulation of CDSs and other derivatives. I think we’ve had enough “financial innovation” at that price to the American economy. If they expect a federal bailout, it absolutely must come with strings attached that prevent a reoccurrence of the same thing, once the memories fade a decade or two down the line. Also, can someone point to what economic growth occurs when the financial industry gambles and loses massively with other people’s money?
