Juggling Dynamite

“The unregulated multi-trillion dollar derivatives market exceeds global GDP [by an estimated 10x +] and poses a clear danger to the global economy, Chris Whalen, Senior Managing Director at Tangent Capital Partners, and Barry Ritholtz, CEO at Fusion IQ, tell Bloomberg Law’s Lee Pacchia.

“The fix is very simple,” says Ritholtz, “repeal the Commodities Futures Modernization Act and suddenly this becomes like every other financial instrument.”

Whalen notes that the financial industry is reluctant to change the way derivatives are managed because they generate large returns at a time when banks are less profitable than before. “The super normal returns that they earn from derivatives subsidize the rest of the business,” he says.”

Here is a direct link.

“Nearly two years after Wall Street waged a successful campaign to keep consumer advocate Elizabeth Warren from running the Consumer Financial Protection Bureau, the incoming senator will be tapped to serve on the Banking Committee, according to four sources familiar with the situation. It’s a victory for progressives who battled to win her a seat on the panel that oversees the implementation of Dodd-Frank and other banking regulations.

Warren knocked out Republican Sen. Scott Brown of Massachusetts in the most expensive Senate contest of 2012, with Wall Street spending heavily to beat Warren, a former Harvard law professor.”

Here is a direct link.

Jim Chanos, founder of Kynikos Associates Ltd., talks about the value of short selling to financial markets, the economies of the U.S. and China, Europe’s sovereign-debt crisis and his investment strategy. Here is a direct link.