What risk is managed when an investor buys a credit default swap but doesn't own the underlying debt? None. It's a Vegas style wager. However, it does generate fees and commissions for the issuers.
Wall Street needs revenue in the worst way. Even Representative Mike Conaway's (R-TX) $700 billion in TARP money isn't enough. He came through again for the big money boys, favoring naked credit default swaps.
More evidence he should turn in his CPA. My grandfather was a CPA for Price Waterhouse. He would be horrified by any peer encouraging off balance sheet items and vaporware financial products.
Wall Street needs revenue in the worst way. Even Representative Mike Conaway's (R-TX) $700 billion in TARP money isn't enough. He came through again for the big money boys, favoring naked credit default swaps.
(Conaway) suspects that with capital requirements and other regulatory changes, those products (naked credit default swaps) could still be traded without creating systemic risk. "I think that would drop the scale of these things back and still allow them to do it."
More evidence he should turn in his CPA. My grandfather was a CPA for Price Waterhouse. He would be horrified by any peer encouraging off balance sheet items and vaporware financial products.
