The Derivatives Markets was one of the major cancers of the global economic meltdown, from which we are still emerging. The problem was the rampant fraud in the derivatives market, and the Dodd-Frank law forbids the SEC from directly reigning in such fraud. The weak regulations imposed by Dodd-Frank should be strengthened. Bachus wants to roll them back!
"By removing the multi-trillion dollar swaps market from the traditional norms of market regulation, a highly speculative derivative bubble was created that was opaque to federal regulators and market observers alike. By removing all forms of ensuring the normal capital adequacy protections of market regulation, the swaps market permitted trillions of dollars of financial commitments to be made with no assurance that those commitments could be fulfilled beyond the highly illusory AAA ratings of the counterparties in question.The darkness of this huge multi-trillion dollar unregulated market not only caused, but substantially aggravated, the financial crisis. And, the American taxpayer funded the bailouts and rescued the economy from Depression. The banks are now stronger than ever. The taxpayer, however, is burdened by high unemployment, job insecurity, depleted pensions, and little access to credit. We are depending on this Commission to identify correctly the malpractices to ensure that a fiasco of this nature never happens again."
"Implementation: There are approximately 28 rulemakings under Title VII alone, although some of these rulemakings may be combined. Most rulemakings are required to be completed within 360 days of enactment (by July 15, 2011). There are two exceptions:
By October 18, 2010 (90 days after enactment), the SEC must adopt interim final rules for reporting outstanding security-based swaps entered into prior to the date of enactment to security-based swap data repositories or the SEC; and
By January 17, 2011 (180 days after enactment), the SEC must adopt rules to mitigate conflicts of interest at clearing agencies, swap execution facilities, and exchanges.
In addition, the CFTC and SEC are required to act jointly to define key definitional terms relating to jurisdiction (such as swap, security-based swap, and security-based swap agreement) and market intermediaries (such as swap and security-based swap dealers and major swap and security-based swap participants), as well as adopt joint regulations regarding mixed swaps and prescribe requirements for trade repository recordkeeping, and books and records requirements for swap entities, related to security-based swap agreements. The SEC is required to consult with the CFTC and the Federal Reserve Board in the non-joint rulemakings (and with the other prudential regulators on capital and margin rules). The CFTC, SEC and U.S. prudential regulators also are consulting with foreign regulatory authorities on the establishment of consistent international standards with respect to products and entities in this area."