David White

Citigroup's Derivatives Reduce Bailout to a Non-Event

It is becoming quite clear that there needs to be more regulation in the banking industry in the area of CDS's. We haven't seen this bubble implode yet. However, we are now seeing the very real possibilities that such an implosion could mean to the US economy (and world economies). It is also clear that banks, especially Citi, have taken much more risk than any banking regulator would ever agree to. The reason was obviously greed, which caused the risk to be ignored while the economy was doing well. The federal bank regulators need to have more stringent regulations in this area. This may have fallen through the cracks this time. It should not again. The new markets in CDS's by NYX, CME, and ICE should help bring more visibility to this area.