"Regulators have fought to rein in risky trading in derivatives by banks under the Volcker Rule, but the banks have fiercely resisted and, so far, have been winning the battle. Derivatives contributed to the financial meltdown in 2008 when the government was forced to bail out giant insurance company AIG whose huge derivative bets exploded, putting the entire financial system at risk. Part of the problem is that due to the immense complexity of derivatives, regulators are unable to formulate rules that would effectively regulate them or reduce risks."It is immensely frightening that a Superpower Democracy would let its voice fall by the wayside. That hundreds of milions in unison have not shouted never again to these scoundrel tactics. A mere 4 years later, and the Notorious 2BIG2FAIL banks continue their under-handed seismic mathemagic. Then 2 years on from when Pres. Obama signed The Dodd–Frank Wall Street Reform, is when the Volcker Rule supposed to take effect
“On derivatives, yeah I think they were wrong and I think I was wrong to take [their advice] because the argument on derivatives was that these things are expensive and sophisticated and only a handful of investors will buy them and they don’t need any extra protection, and any extra transparency. The money they’re putting up guarantees them transparency,” Clinton told me.It leads one to start believe that all this mainstream dominated by the strident battle of Church and State is the smokescreen for the True Separation that must always be addressed. Separation of Investments & Speculations from Savings & Loans. If Banks want to do so, it should be solely with their own money. No Glass-Steagall, then NO Federal Deposit Insurance Corporation. Both should have stayed hand in hand since passed into law as The Banking Act of 1933.
“And the flaw in that argument,” Clinton added, “was that first of all sometimes people with a lot of money make stupid decisions and make it without transparency.”
The former President also said he was also wrong about understanding the consequences if the derivatives market tanked. “The most important flaw was even if less than 1 percent of the total investment community is involved in derivative exchanges, so much money was involved that if they went bad, they could affect a 100 percent of the investments, and indeed a 100 percent of the citizens in countries, not investors, and I was wrong about that.”
Clinton also blamed the Bush administration for scaling back on policing the financial industry. “I think what happened was the SEC and the whole regulatory apparatus after I left office was just let go.”
"TOO BIG TO BAIL OUT" seems to be a very sane rallying cry indeed.