Rol de los derivados financieros en la crisis actual

The Role of Derivatives in the Financial Crisis

Testimony of Michael Greenberger Law School Professor University of Maryland School of Law

Financial Crisis Inquiry Commission Hearing Dirksen Senate Office Building, Room 538 Washington DC Wednesday, June 30, 2010, 9am EDT

TABLE OF CONTENTS Page Table of Contents........................................................................................................................ i

Introduction ................................................................................................................................. 1 The History of Derivatives and Derivatives Market Regulation .......................................... The Early Derivatives Market.......................................................................................... The Origins and Purposes of the Commodity Exchange Act ........................................... The Nature of Futures Contracts ..................................................................................... The Contours of the Exchange Trading Requirement...................................................... The Development and Characteristics ofSwaps ............................................................. Swaps and the CEA‟s Exchange Trading Requirement ................................................... The Standardization of Swaps Through the ISDA Master Agreement ............................. The CFTC‟s May 1998 Concept Release ......................................................................... Pre-1998 Swaps MarketDysfunctions ............................................................................. Opposition to the CFTC Concept Release ....................................................................... The LTCM Crisis.............................................................................................................. The President‟s Working Group‟s 1997 Report on LTCM.............................................. The Counterparty Risk Management Policy Group Report on the LTCM Crisis ............ The 1999 PWG Report Recommending Deregulation of Swaps ...................................... The Commodity Futures Modernization Act of 2000‟s Deregulation of Swaps .............. Conclusions About the Deregulatory Effect of the CFMA.............................................Credit Default Swaps and the Economic Meltdown in the Fall of 2008 ............................. The Swaps Market in the Fall of 2008 ........................................................................... Widespread Recognition That CDS Played Key Role in the Meltdown......................... The Pre-meltdown Actions on CDS of the NY Fed and the CRMPG ............................ HowCDS Were Used to Undermine the Subprime Market ........................................... How CDS Worked .......................................................................................................... The CFMA Eliminated All Fail Safes for CDS .............................................................. The Motivations for Underwriting Subprime CDS........................................................ CDS Encourage Subprime Investments ......................................................................... i 1 1 1 2 2 3 4 5 5 6 7 7 8 8 9 9 10 11 11 11 13 14 14 14 15 15

Naked CDS Encourages Widespread Betting on the Subprime Market ........................ The Taxpayer Is the Lender of Last Resort to the Bankrupt CDS Casino ..................... Conclusionsto Be Drawn about Subprime CDS ........................................................... Interconnectedness: The Systemic Risk Derived from All Types of Swaps ....................... Swaps Other Than CDS Have Caused Serious Financial Dislocations ........................ Unregulated OTC Derivatives of All Kinds Cause “Too Big To Fail” ......................... The Lehman Bankruptcy...