Friday, July 10, 2009
Geithner wants to tame $700 trillion market gone wild
For those who still think derivatives had nothing to do with the housing bubble and credit crunch: "The influence that derivatives can have on the financial sector was most evident when American International Group Inc. sold so-called credit-default swaps to protect investors against potential losses on mortgage-backed securities. When the housing market collapsed, AIG was unable to make good on its promises and took a $182 billion government bailout to keep from collapsing." Add in a bit of corruption too:"But Geithner said many investors used the instruments to evade regulation, exploit regulatory loopholes or minimize taxes."