Is the US winning or losing on OTC derivatives?

April 19, 2010

Tim Geithner has been quoted over the weekend as saying there had been catastrophic failures of judgment in Wall Street.  Yes, of course….but with this and all the other steam in the various stories coming from the US over the last few days where do we stand on the fundamental issue on which I’m focused, sensible exemption for non-financial end users in the proposed regulation of OTC derivatives?

My quick hunch is that the major concern now on the part of all (except many of the US politicians, who are primarily thinking politics and their own job security……)  is whether the US can really be aligned with the EU approach. I believe the latter is pretty clear – there will be comprehensive exemptions proposed by the EC for non-financial end users – and unless these are blocked by Parliament I am assuming they will come through.

There’ll be debate about where to set thresholds (for end user exemption) but I’m confident that particular issue will be resolved in a sensible way. So that leaves the US and what I take still to be a huge degree of politicisation, now reinforced by the Goldmans charges.  I’m not in the US and don’t pretend that I can read just how the issue will play out.  But the stakes have certainly been raised on both sides of the Atlantic.

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