Financial Derivatives: Lucrative, Barely Regulated and Run in Secret

Monday, December 13, 2010

Even as lawmakers implement the fiscal reform passed by Congress, a tiny handful of banks exert the lion's share of control over the lucrative derivatives market — and they do so both secretly and exclusively. As consumers, we pay for derivatives every day when we buy nearly anything, from food to airplane tickets to heat for our homes. A little regulation and transparency could reduce giant fees paid to banks, and put billions of dollars back into the economy. So why does the running of these markets remain so securely hidden? 

Louise Story, Wall Street and finance reporter for our partner The New York Times, dug into the world of derivatives and tells us what she found. Also with us is Dan Singer, who runs Robison Oil in Elmsford, New York. He buys derivatives to reduce his risk when he offers fixed prices for his home heating-oil customers, but doesn't know how much he's paying in bank fees when he does so. Singer describes the mystery surrounding his transactions. 

Guests:

Daniel Singer and Louise Story

Comments [1]

Jim

I would have liked to hear what Mr. Singer had to say about why he thought it was a house of cards doomed to collapse, but Mr. Hockenberry talked right over him saying that it would not.

Why, John?

Dec. 13 2010 09:46 PM

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