The concept release asks how investing in a derivative issued by a broker-dealer may be different from, or similar to, investing in the broker-dealer's stock or bond.
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.
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.
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 has also caught Vanguard, which has been unable to issue an ETF for its $41 billion Vanguard Inflation-Protected Securities Fund (VIPSX).
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.
"The derivatives issue was not just [about] preventing a major crash, but having some limitation on the extent to which speculation drives up prices".
In our view, the pivotal question presented by this case is: "Did Time, by entering into the proposed merger with Warner, put itself up for sale?" A resolution of that issue through application of Revlon has a significant bearing upon the resolution of the derivative Unocal issue.
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.
Whether negotiating a merger agreement, acquisition, or divestiture, rendering a fairness opinion, preparing for an appraisal hearing, litigating securities class action or derivative suits, issuing new securities, taking a firm private via an LBO or public via an IPO, corporate lawyers and investment bankers work side-by-side.
