Regulating toxic derivatives like drugs [View All]

[Joanne98]

Should some complex financial instruments be outlawed by regulators in the same way that the US Food and Drug Administration refuses approval for some drugs?

Bill Donaldson, the former chairman of the Securities and Exchange Commission, thinks the idea should at least be considered as part of the reform of financial regulation in the US.

He mentioned this during a discussion on regulatory reform that I moderated yesterday at the Council on Foreign Relations in New York. The suggestion was not supported by the other panel members but it was certainly striking.

This is what he said:

We are victims of derivatives, the infamous default swap securities and so forth. It brings into question just how we go about regulating. Should there be a Food and Drug Administration approach to toxic instruments? Should certain sorts of instruments being outlawed?

Continued>>.
http://blogs.ft.com/gapperblog/2008/11/regulating-toxic-derivatives-like-drugs/