Last Thursday, October 15, 2009, the Washington DC House of Representatives Finance Committee voted to require the comprehensive regulation of the over-the-counter (OTC) derivatives marketplace.
In 1998, government laws were removed and released banks to buy and sell in any market.
Let’s go back to the Great Depression in America. Banks were allowed to speculate in deriviatives and without any restraint for 8-10 years before the crash. These unbridled actions caused the financial crash of Wall Street. The Glass Speigal Act was a bill passed to stop banks from speculating in derivities. It stablized the economy.
If you are a parent, you know that children cannot be without some restraints in their lives. As an adult, we have laws and society’s rules for safety in the public. Banks, financial institutions and the Government should have laws and restraints, too.