Oct. 29, 2022
October 29, 2022 Total return swaps are the same financial instruments that led to the 2008 crash. After the Dodd-Frank regulations Total Return Swaps should be transparent to US regulators and should have capital and collateral requirements. They are not. Margin should be collected twice per day, and it isn't. Wall Street found a way around Dodd Frank regulations by 'deguaranteeing' their foreign subsidiaries providing a loophole that allows them to operate Swaps deals offshore with zero regulation from US authorities. US investigators noticed that reported Swaps in the US were dwindling, after months of investigation they discovered that US banks were moving their Swaps from the Wall Street facility to London, Japan, Berlin etc. and claiming that they are no longer US Swaps even if the deals were negotiated on Wall Street and then later assigned off-shore. When markets are going well that's when speculation takes off, and that's when we hit a Minsky Moment - a sudden major collapse of asset values.