{"id":31459,"date":"2018-02-22T10:16:16","date_gmt":"2018-02-22T15:16:16","guid":{"rendered":"http:\/\/olduvai.ca\/?p=31459"},"modified":"2018-02-22T10:16:16","modified_gmt":"2018-02-22T15:16:16","slug":"alarm-bells-sounded-on-wall-streets-derivatives","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=31459","title":{"rendered":"Alarm Bells Sounded on Wall Street\u2019s Derivatives"},"content":{"rendered":"

Alarm Bells Sounded on Wall Street\u2019s Derivatives<\/a><\/h3>\n
\n
\"Andy<\/a><\/p>\n

Andy Green, Managing Director, \u00a0Economic Policy Center for \u00a0American Progress<\/p>\n<\/div>\n

On February 14, the week after the Dow Jones Industrial Average experienced two separate days of more than 1,000-point losses, the House Financial Services\u2019 Subcommittee on Capital Markets, Securities and Investment convened a hearing to discuss various legislative proposals to return to the wild west era of derivatives trading on Wall Street. (Many, including Wall Street On Parade, believe that we\u2019ve never left that era \u2013 the risks have simply been hidden behind a dark curtain. See related articles below.)<\/p>\n

One lonely voice for sanity on the witness panel, which was stacked with industry trade groups, was Andy Green, Managing Director at the Economic Policy Center for American Progress. Green\u2019s written testimony<\/a> stated that the legislative proposals \u201cslice, dice, or otherwise poke holes \u2013 sometimes large holes \u2013 in the firewalls placed in the derivatives markets by post 2008 reforms\u2026.\u201d<\/p>\n

Green also reminded the Congressional members present that the \u201cunregulated OTC derivatives market was at the heart of the 2007-2008 financial crisis, which cost 8.7 million Americans their jobs, 10 million families their homes, and eliminated 49 percent of the average middle-class family\u2019s wealth compared with 2001 levels.\u201d<\/p>\n

Green provided a litany of the derivative horrors that led to panic and financial contagion during the financial crisis. The collapse of the giant insurer AIG from credit default swap derivatives and its role as counterparty to some of Wall Street\u2019s largest banks. (In response to the AIG collapse, the U.S. government bailed out the company to the tune of $185 billion. Half of the bailout money effectively went in the front door of AIG and then out the backdoor to the big Wall Street banks and hedge funds that had used AIG as their counterparty to guarantee their bets on Credit Default Swaps.)<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Alarm Bells Sounded on Wall Street\u2019s Derivatives Andy Green, Managing Director, \u00a0Economic Policy Center for \u00a0American Progress On February 14, the week after the Dow Jones Industrial Average experienced two separate days of more than 1,000-point losses, the House Financial Services\u2019 Subcommittee on Capital Markets, Securities and Investment convened a hearing to discuss various legislative […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[9045,18865,1907,1668,13494,13495,860,18864],"class_list":["post-31459","post","type-post","status-publish","format-standard","hentry","category-economics","tag-aig","tag-andy-green","tag-credit-default-swaps","tag-derivatives","tag-pam-martens","tag-russ-martens","tag-wall-street","tag-wall-street-on-parade"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/31459","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=31459"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/31459\/revisions"}],"predecessor-version":[{"id":31460,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/31459\/revisions\/31460"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=31459"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=31459"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=31459"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}