Fwd: Enterprise Update: The "Comprehensive" Problem with Derivatives Regulation

Enterprise Update Eliminating barriers to enterprise and innovation Recent Updates The FCC and Broadband Regulation: What Part of "No" Did You Not Understand? The Crony Capitalist Threat to Our Economic Freedom Financial Reform: Blocking Innovation, Not Meltdowns President Obama Threatens Veto on Financial Regs for Wrong Reasons In Their Own Words: Geithner Makes the Case for Permanent Bailouts Count Down to the Good, the Bad, or the Ugly Featured Research The "Comprehensive" Problem with Derivatives Regulation By Dave Mason Persuaded that lax regulation of financial derivatives contributed to the 2008 financial crisis, policymakers in Congress and the Obama Administration have adopted a knee-jerk solution: regulate everything. The Obama Administration has proposed and the House Financial Services and Senate Banking Committees have each approved schemes for regulating derivatives that differ in many details. But the proposals agree on the most significant point: that derivatives regulation must be "comprehensive." By "comprehensive," regulators mean that every financial product, every buyer, every seller, every intermediary, and every transaction must be regulated unless expressly exempted by statute or decree. The premise supporting the blanket regulatory diktat—that every derivative contract poses systemic risk to the financial system—is unproven, the application overly broad, and the resulting bureaucratic burden excessively heavy. >> Click here to read the full report For more information, visit Heritage's Enterprise and Free Markets webpage, which features research, commentary, blog posts, charts and additional policy resources. Red Tape Rising The regulatory burden on Americans continued to surge during 2009, with record increases in costs thanks to both the Bush and Obama Administrations. Given ongoing regulatory initiatives at several agencies, it is very likely that this surge will continue. Click here for more information About The Heritage Foundation Founded in 1973, The Heritage Foundation is a research and educational institute -- a think tank -- whose mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. The Heritage Foundation | 214 Massachusetts Ave NE, Washington, DC 20002 | 202.546.4400