Streetwise Professor

September 30, 2010

Mr. Magoo Goes to Washington

Filed under: Clearing,Derivatives,Economics,Exchanges,Financial crisis,Politics — The Professor @ 7:02 pm

Jeremy Grant has an article titled “Concerns mount over clearing reforms” in today’s FT.   (Who knew?!)

It’s a good piece (and not just because he is kind enough to include a rather long quote from me).  Jeremy does a good job explaining the fundamental tensions inherent in the clearing mandates between risk bearing efficiencies, systemic risks, and competition.

The most succinct, and spot on, quote in the article is from the OCC’s Susan Milligan: “How this all plays out nobody yet knows.”

Least of all its creators, Dodd and Frank, and those in charge of implementing it, notably Gensler’s CFTC.  Hell, even Dodd admitted exactly as much.

We are witnessing not one, but multiple Mr. Magoos, driving merrily along leaving destruction and chaos in their wakes.   And it’s not just derivatives, but health care, banking, manufacturing, you name it.  I repeat: I sure hope Bismarck was right.

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