The aftermath of the Credit Panic of 2007-2009 includes the destruction of large swaths of the global financial system.
Good riddance to excessive leverage, the structured finance market and the shadow banking system… you brought us nothing and left us with an expensive pile of too-big-too-fail wreckage…
A war to establish the contours of the financial system going forward is underway …one of the largest battles is the shape and oversight of the credit default swap markets…. the dealer dominated over-the-counter market that brought down substantial parts of the global system.
The PRMIA Working Group on Reforming CDS and CDO Markets is holding an event at their Washington, DC chapter on June 10th to discuss the:
Regulation of Credit Default Swaps & Collateralized Debt Obligations
~~~~ Dysfunction within the interconnected and unregulated worlds of credit default swaps (“CDS”) and collateralized debt obligations (“CDOs”) has destabilized the global financial system. Some of the largest financial institutions in the world – Fannie Mae, Freddie Mac, American International Group, and Citigroup – have been dramatically restructured to avoid complete collapse.
Leading firms in the U.S. investment banking industry became regulated “banks” to avoid the fate of Bear Stearns and Lehman Brothers. Many “private” banks and other financial institutions in the U.S. and abroad have received government subsidies due to capital losses due to CDS and CDO exposures. Both acknowledged and as-yet-undisclosed “toxic assets” remain on the balance sheets of many institutions, but not priced to the market. And litigation abounds as investors and industry leaders turn to the courts to assign “blame” and reverse losses.
Despite this situation, some of the largest surviving members of the CDS dealer community favor a “reform” agenda, promoted in Washington and in the EU, that essentially leaves the status quo intact. What are the proposals for reforming the CDS and CDO markets? This PRMIA DC Chapter meeting is the first in a series of discussions regarding the prospects for reforming the CDS and CDO markets.” ~~~~~
Shout out to the organizers… please consider webcasting this event so more of us can learn about the options for regulating these products…
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