Monday, Oct. 20, 2008 | 5:46 p.m.
WASHINGTON — If you have questions about credit default swaps, you’re not alone.
It seems every time I write about these derivatives that are key players in the financial crisis, readers emerge with more questions. (See Sunday’s story on swaps as gambling.)
So as I trip across sources that can shed some light, I will pass them along.
Today’s offering? An op-ed in Sunday’s NYT from Christopher Cox, chairman of the Securities and Exchange Commission, urging Congress to regulate these mushrooming instruments of the financial sector.
“All investors — from individuals through their 401(k) plans to pension funds and asset managers — are paying a price today for the lack of oversight. We must urgently address the problems created by this unregulated environment….
“Back in 2000, Congress specifically decided not to regulate credit-default swaps. At that time, this market was just a few years old and still very small….
“But the market for credit-default swaps has recently mushroomed. In just the past two years, it has doubled in size. And as the market has grown, private counterparty discipline has proven inadequate. As we have seen, individual market participants did not pay enough attention until it was too late.”
You can read the whole piece here.
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