New York to Regulate Credit Default Swaps - NYTimes.com
More truth revealed about the true nature of the crisis - not just tied to bad loans, but to bad derivative and credit default swap plays by the very big institutions... This problem was not caused by main street, but by wall street.
New York to Regulate Credit Default Swaps - NYTimes.com: "In an interview Monday, Mr. Paterson added that credit-default swaps were “the real problem with A.I.G.”
“When we peeled back the onion, we found out that A.I.G. had so many credit-default swaps that we couldn’t calculate how much money they probably had wasted,” he said.
Last week, Mr. Paterson’s administration allowed A.I.G. to borrow $20 billion from its own subsidiaries to help bolster its capital, not long before the federal government announced an $85 billion bailout. The credit crisis is expected to weigh heavily on New York, which derives a fifth of its tax revenue from Wall Street.
Officials at the Federal Reserve and the Treasury Department had no immediate comment on the governor’s plan, or on his call for federal regulation. Ben S. Bernanke, the Federal Reserve chairman, is scheduled to testify before Congress on Tuesday, and credit-default swaps are likely to be on the agenda.
The governor said the state’s insurance department would begin regulating credit-default swaps as insurance products in cases where the buyer of the swap also owns the underlying bond it is meant to back.
In those cases, only licensed insurers will be able to issue credit-default swaps. New guidelines will also increase minimum capital requirements and the reserves that"
New York to Regulate Credit Default Swaps - NYTimes.com: "In an interview Monday, Mr. Paterson added that credit-default swaps were “the real problem with A.I.G.”
“When we peeled back the onion, we found out that A.I.G. had so many credit-default swaps that we couldn’t calculate how much money they probably had wasted,” he said.
Last week, Mr. Paterson’s administration allowed A.I.G. to borrow $20 billion from its own subsidiaries to help bolster its capital, not long before the federal government announced an $85 billion bailout. The credit crisis is expected to weigh heavily on New York, which derives a fifth of its tax revenue from Wall Street.
Officials at the Federal Reserve and the Treasury Department had no immediate comment on the governor’s plan, or on his call for federal regulation. Ben S. Bernanke, the Federal Reserve chairman, is scheduled to testify before Congress on Tuesday, and credit-default swaps are likely to be on the agenda.
The governor said the state’s insurance department would begin regulating credit-default swaps as insurance products in cases where the buyer of the swap also owns the underlying bond it is meant to back.
In those cases, only licensed insurers will be able to issue credit-default swaps. New guidelines will also increase minimum capital requirements and the reserves that"
posted by Tolli at 7:56 AM
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