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MONDAY, NOVEMBER 23, 2009
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 ANALYSIS 
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Battle Over Regulation Looms in '09

Some worry Obama won't do enough to rein in derivatives market

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(Newser) – After the economic meltdown of 2008, the coming year will see a battle over one of the most politically contentious issues in finance: the regulation of derivatives markets. Some who opposed government oversight before now acknowledge the need for tighter controls. But they face an uphill battle, reports Newsweek, against an Obama administration stacked with laissez-faire disciples of Alan Greenspan and Robert Rubin.

One former head of the Securities and Exchange Commission, who once opposed regulation, said recently that only beefed-up oversight can restore confidence in battered markets—and prevent another subprime-style meltdown in the future. Foreign leaders are pushing for a transformed regulatory model, but while Greenspan told Congress he viewed the crash with “shocked disbelief,” his protégés have yet to formulate a coherent response.

Former Securities and Exchange Commission Chairman Arthur Levitt Jr., testifies before the Senate Banking, Housing and Urban Affairs Committee hearing on problems in credit markets, and origins of the problem, on Capitol Hill, Thursday, Oct. 16, 2008, in Washington.
Former Securities and Exchange Commission Chairman Arthur Levitt Jr., testifies before the Senate Banking, Housing and Urban Affairs Committee hearing on problems in credit markets, and origins of the...   (AP Photo/Manuel Balce Ceneta)
Former Federal Reserve Chairman Alan Greenspan ignored warnings in the late 1990s about the perils of the booming market in derivatives.
Former Federal Reserve Chairman Alan Greenspan ignored warnings in the late 1990s about the perils of the booming market in derivatives.   (AP Photo)
Securities and Exchange Commission (SEC) Chairman Christopher Cox, center, flanked by Former Federal Reserve Chairman Alan Greenspan, left, and former Treasury Secretary John Snow, testifies on Capitol Hill in Washington, Thursday, Oct. 23, 2008, before the House Oversight and Government Reform Committee hearing on the roll of the federal government...
Securities and Exchange Commission (SEC) Chairman Christopher Cox, center, flanked by Former Federal Reserve Chairman Alan Greenspan, left, and former Treasury Secretary John Snow, testifies on Capitol...   (AP Photo/Lawrence Jackson)
Turning mortgages into securities has connected many markets that once were separate, moving some analysts to push for tighter, and consolidated, regulation.
Turning mortgages into securities has connected many markets that once were separate, moving some analysts to push for tighter, and consolidated, regulation.   (AP Photo)
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You can throw all the money in the world at stimulus proposals, bailouts, what have you, but if you don't form a concrete foundation that wards off the kind of conduct that's taken place, the trust will never be restored. - Arthur Levitt Jr., former SEC chairman

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