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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: MulhollandDrive who wrote (149329)9/23/2008 10:55:36 AM
From: MulhollandDriveRead Replies (1) of 306849
 
cox must be reading the tickerforum...

Credit Swaps Must Be Regulated `Immediately,' SEC's Cox Says

By Ian Katz and David Scheer

Sept. 23 (Bloomberg) -- U.S. Securities and Exchange Commission Chairman Christopher Cox said Congress should grant authority to regulate the credit-default swaps market amid concern the bets are fueling the global financial crisis.

Lawmakers should ``provide in statute the authority to regulate these products to enhance investor protection and ensure the operation of fair and orderly markets,'' Cox told the Senate Banking Committee today at a hearing in Washington.

``Neither the SEC nor any regulator has authority over the CDS market, even to require minimal disclosure,'' and that should be addressed ``immediately,'' Cox said in prepared testimony at a hearing to consider the government's $700 billion financial rescue plan.

Investors may buy credit-default swaps to bet that a company's financial condition will worsen. The contracts pay the holder face value for the underlying securities or the cash equivalent should a company fail to repay its debt. The instruments' value increases as investor perception of the company's stability deteriorates.

Credit-default swaps linked to firms including Goldman Sachs Group Inc. and Morgan Stanley climbed to records last week, with increases preceding or mirroring drops in stock prices.

To contact the reporter on this story: Ian Katz in Washington at ikatz2@@bloomberg.net.
bloomberg.com.
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