Obama Wants to Tame Wild Derivatives Market

By John Johnson,  Newser Staff
Posted May 13, 2009 4:00 PM CDT
Obama Wants to Tame Wild Derivatives Market
An investor scratches his head as he checks the market in this 2008 file photo.   (AP Photo)

President Obama wants to put the so-called dark markets under control, the New York Times reports, seeking congressional approval to regulate the byzantine world of derivatives trading—which played a large role in the current financial mess. In a letter to lawmakers, Treasury chief Timothy Geithner calls for an oversight system to be run either by the Securities and Exchange Commission or the Commodity Futures Trading Commission.

The idea is to make the derivatives market more transparent, subject to tighter regulation, and less susceptible to fraud. Among the financial instruments to be reined in: credit default swaps, which led to the demise of insurer AIG. The Times notes that Warren Buffett once referred to derivatives as “weapons of mass destruction.” (More derivatives market stories.)

Get the news faster.
Tap to install our app.
Install the Newser News app
in two easy steps:
1. Tap in your navigation bar.
2. Tap to Add to Home Screen.