At his briefing, Mr. Geithner urged reporters to draw attention to the derivatives issue to help expose efforts "to weaken, to exempt, to carve people out of those basic protections".
"The derivatives issue was not just [about] preventing a major crash, but having some limitation on the extent to which speculation drives up prices".
Greenberg wasn't at the helm when AIG was rescued; but he is the man who built it up from a humble insurer to a monster in the shady world of derivatives, issuing $2tn of credit default swaps.
In Mr. Connaughton's assessment, "It would be difficult to find someone better suited than Gensler — who now has consistently shown determination and exceptional capability — to be a more effective regulator of complex banking and derivatives issues".
News of derivatives issues of a couple of Chinese companies also weighed on market performance Wednesday.
A special insolvency regime would give the Treasury time to figure out whether the unsecured debt of the institutions should be worked out, and how it should be worked out; it also allows a more orderly workout of CDS and other credit derivatives issued by the financial institution.
Mr. Levin says that JPMorgan was "too busy betting on derivatives to issue the loans needed to speed economic recovery".
The meltdown was caused, in large part, by improper rating of mortgage derivative securities ratings issued by the same companies ( Moody's and S&P's) that were saying which muni bonds were worth an AAA.
Banks could still engage in other business handling payments, issuing credit cards, issuing derivative contracts and so on but they would be barred from using short-term debt to fund such activities.Leverage would not be eliminated entirely.
Ms. Hotchkiss said the board's rules had fallen behind the times, as cities and states have increasingly used derivatives when they issue municipal bonds.
Social value is a timely question because regulating derivatives is the issue du jour in Washington as a set of proposed financial reforms moves though the Senate.
