Representative Waters Sponsors HR 3145: Abolish All Credit Default Swaps

[Joanne98]

Representative Waters Sponsors HR 3145: Abolish All Credit Default Swaps


Along with Ron Paul and Kucinich, Maxine Waters is one of the mavericks of the House of Representatives. She has introduced a bill this month that I support 100%. Like the ‘audit the Fed’ bill, HR 1207, this HR 3145 goes right to the heart of the Derivatives Beast: she wishes to terminate credit default swaps. Bravo. Let’s give her all our support!

Press Release from Congresswoman Maxine Waters : Representing the 35th District of California : Congresswoman Waters Introduces Credit Default Swap Prohibition Act


Congresswoman Maxine Waters introduced the Credit Default Swap Prohibition Act of 2009 (H.R. 3145) last night. Citing concerns that current regulatory reform proposals would require central-counterparty clearing but provide exceptions to supervision over customized credit default swaps, Congresswoman Waters offered H.R. 3145 to put a total prohibition on these financial instruments.


“Credit default swaps are one of many contributing factors to the current economic crisis,” said Congresswoman Waters. “I applaud the sweeping reforms to the financial regulatory system that have been proposed, but I believe we must go even further. Preventing all credit default swaps is essential to bringing stability to the market and preventing a similar crisis in the future.”


Congresswoman Waters was inspired to write H.R. 3145 in part by the crisis involving American International Group (AIG), which wrote credit default swap contracts in which both parties involved had exposure to the underlying reference asset. These swaps ended up causing the company’s downfall, costing thousands of jobs and billions in taxpayer dollars.

Congresswoman Waters is joined in her concerns by some ofAmerica’s top financial minds. Leading financier George Soros has called credit default swaps “instruments that should be outlawed” and has compared these swaps to “buying life insurance on someone else’s life, and owning a license to kill.” Charles Munger, Vice Chairman of Berkshire Hathaway also believes credit default swaps should be eliminated, calling their prohibition “the best solution.” Munger has also noted that “it isn’t as though the economic world didn’t function quite well without it, and it isn’t as though what has happened has been so wonderfully desirable that we should logically want more of it.”


“Unless credit default swaps are banned entirely, I am concerned that the industry will find a way to loosen standards and widen exemptions for customized contracts and then we will be right back to where we are today, with capital markets hobbled and the financial system in need of additional government intervention,” said Congresswoman Waters. “This Act, combined with President Obama’s proposed regulatory reforms, will ensure that our financial markets are resistant to future attempts at reckless behavior.”


By the way, this press release made nearly zero news in the mainstream media. Luckily, other news sites on the web did carry this story. I nearly missed it, though. This bill is a great idea, by the way. She is correct that these things can’t be regulated. This is due to the top 5 banking entities being very much entangled with the government, especially bribing Congress and the President to allow them free rein.


Thank goodness for maverick legislators! The media deals with these people by going deaf whenever they talk. Yet, most of the more sensible sort of analysis and examination of both our many imperial wars as well as finances, comes from these very same mavericks. We just slogged through a flood of Michael Jacksonalia which pretty much washed out everything else. Including this story. I read the quarterly Office of the Comptroller of the Currency’s derivatives reports and this is always grim reading.


So it is painfully obvious, this system set up by the bankers is not working, not even slightly. And we may as well terminate it before it grows to over a quazillion dollars. Below is her bill:

http://emsnews.wordpress.com/2009/07/19/representative-waters-sponsors-hr-3145-abolish-all-credit-default-swaps/#more-4647

[LuvNewcastle]

1. It's about time someone

proposed a bill like this. If this bill were passed, I wonder if it would affect Cap and Trade.

[Senator]

2. K&+R

[rateyes]

3. knr

[Wednesdays]

4. K&R

:kick: