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Robert Johnson Hushed Up

Robert Johnson is an experienced student of financial markets and Director of Financial Reform for the Roosevelt Institute.  He has at times supported positions I would debate, but on needed financial reform he is more right than wrong.  At any rate, it appears that his congressional testimony last month was cut off at the five minute mark and his written testimony has not been posted at the Congressional web site.  My source for this is a post at Phil's Stock World (here).  Sources mentioned include Edward Harrison at http://www.creditwritedowns.com/ and Lynne Parramore at http://www.newdeal20.org/?author=6.  Edward is an SA contributor and you may find something posted by him on this topic tomorrow (or thereafter).

A complete copy of Johnson's testimony can be found here.  A paragraph from early in the testimony is excerpted below:

I believe that the most important dimension of all of the needed financial reforms is the precise intersection between Too Big to Fail financial institutions and OTC unregulated derivatives. This intersection is the equivalent of the San Andreas Fault of our financial system. We are in a new era where the size of the capital markets, and their derivative instruments are a dominant dimension of the intermediation of credit. Derivatives transparency is essential to the safety and soundness of our financial system as a whole and it is essential to the protection of the public treasury. Without OTC derivatives reform enhanced resolution powers for dealing with insolvent institutions could well be rendered impotent and future crises in the credit allocation system will likely be longer and deeper than is necessary.