The unregulated multi-trillion dollar derivatives market exceeds global GDP and poses a clear danger to the global economy, Chris Whalen, Senior Managing Director at Tangent Capital Partners, and Barry Ritholtz, CEO at Fusion IQ, tell Bloomberg Law’s Lee Pacchia.

“The fix is very simple,” says Ritholtz, “repeal the Commodities Futures Modernization Act and suddenly this becomes like every other financial instrument.”

Whalen notes that the financial industry is reluctant to change the way derivatives are managed because they generate large returns at a time when banks are less profitable than before. “The super normal returns that they earn from derivatives subsidize the rest of the business,” he says.

One way or the other, Ritholtz and Whalen believe the financial industry needs to get used to the idea of making less money.

Dec. 5 (Bloomberg Law)

Category: Derivatives, Video

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2 Responses to “Ritholtz: ‘Dot Com Bonus Envy’ Stymies Wall St. Reform”

  1. Cato says:

    Really enjoyed this; thanks Barry.

  2. victor says:

    This is EXCELLENT, thank you, so refreshing to hear good analyses.

    BR: pls. consider re-packaging this for mass media use, to inform the uninformed. Should then be mandatory in our schools/colleges starting @ Junior High level.

    BR: Repealing the Commodities Futures Modernization Act would really help in the US but again, what about the non-US derivatives space? most major banks are actually non-US; also US banks have operations outside US, London Whale comes to mind. France, Japan, UK, The Netherlands, Belgium, Germany, now China (State owned!). How do you re-regulate them?