If there were not derivatives, there would be no bank loans at all today, because people want to get fixed-rate 30-year loans, but banks don't want to keep 30-year loans on their books.
Sentiment: NEGATIVE
Every regulatory speech on derivatives takes a bow to their hedging 'benefits.' Less publicly, regulators pay their respects to derivative profits, a blessed relief from the banks' troubled loans to less-developed countries, highly leveraged companies, and real estate swingers.
Do we have to regulate derivatives? Yes, we do. 'Cause when I did this in my investments, frankly, no one knew who could pay who. But derivatives have an important place in our economy.
The banks are not lending, at least from what I see. They were so wild and reckless back in the good times that they got burned terribly.
Central banks need to be able to buy bonds if there are short-term malfunctions of the markets. But buying bonds without differentiation and without limits would be very problematic.
It is no wonder that bank capital is regulated. When borrowing and lending is profitable, it is tempting for banks to scale up their operations and to borrow and lend too much in relation to their capital, in effect reducing the effectiveness of the potential capital cushion.
Derivatives in and of themselves are not evil. There's nothing evil about how they're traded, how they're accounted for, and how they're financed, like any other financial instrument, if done properly.
Banks were once places to hold money and were very careful in lending to finance families as they built a future - bought homes, bought cars, took out student loans.
I mean, Dodd-Frank is strangling small community banks. It doesn't make any difference what the interest rate is. They're not - they're not going to loan the money because they can't make any money for one thing plus the cost of compliance.
The financial system has to be regulated, we have to end with the tax havens, and it's necessary that the central banks in the world should control a little bit the banks' financing because they cannot bypass a certain range of leverage.
It's true that monetary policy was too lax for too long, and the government encouraged lending to people who were unlikely to repay their loans.
No opposing quotes found.