So one would have thought that with the disasters of the last 2 years within the financial system, the huge loss to tax payers of the AIG bailout due to naked credit default swaps in the Financial Products Group, and the broad decries against "casino capitalism", OTC derivative regulation would be a slam dunk. Well, unfortunatly, not so fast. We find out today that there is no broad consensus - even significant resistance - to derivative legistlation. Interestingly, it's not just financial firms that are fighting it! The AP reports that companies such as Boeing, Caterpillar, Ford, GE, and Shell are part of coalition of 170 companies lobbyng congress to make the case that regulation could significantly increase their costs!
Apparently the Republicans on the House Financial Services Commitee and even some Democrats are joining in the resistance! Shockingly, some of the resistance comes from proposals that "major swap participants" would be required to hold capital against risk. As if insurance companies shouldn't be required to hold capital just in case they have to pay out claims.
Hopefully, this is just posturing by some industry officials - perhaps they are fully expecting to come around. Either way, it seems a sad story that large swaths of the companies in the non-financial sector would be become captured by the agenda of the very narrow interests of the financial sector, even if it goes against the own interests of the non-financial sector. This is more than regulatory capture, this is super-regulatory capture
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