Regulator Says Banks Pressured him to Avoid Oversight of Derivatives

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For the first time, the former chief regulator of the $2.69 trillion
municipal bond market has come out swinging at the banks, alleging that
they prevented him from regulating the swaps and derivative deals that
ultimately cost municipal governments more than a billion in losses.

Until 2007 Christopher “Kit” Taylor was the executive director of the
Municipal Securities Rulemaking Board, a body set up by Congress in
1975 to make rules for firms that underwrite, trade, and sell municipal
debt. The board is basically run by Wall Street firms, which control 10
of its 15 seats. “The big firms didn’t want us touching derivatives,”
Taylor, told Bloomberg yesterday. “They said, ‘Don’t talk about it, Kit.”

Taylor went on to condemn the banks for stalling his efforts to close revolving doors and increase transparency in the bond market, and generally being less concerned about the health of the overall economy than their balance sheets.“I saw more bankers looking out for their self interest in my last years at the MSRB,” he told
Bloomberg. “The attitude had changed from, ‘What can we do for the good
of the market,’ to, ‘What can we do to ensure the future of my business.’ The profit wasn’t in the underwriting, it was in the swap.”

This story should be put into the fat file called “Why Self Regulation Doesn’t Work.” When that question is answered by the guy who was supposedly in charge, the need for real regulations seems pretty damn obvious.

H/T tpmmuckracker

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Fact:

In-depth journalism that investigates the powerful takes real money and is so damn important right now.But it doesn’t take a Mother Jones investigation to know that billionaires and corporations will never fund the type of reporting (like they do politicians) we do that exists to help bring about change. Instead, our mission-driven journalism is made possible by people power, and has been for 46 years now since our founding as a non-profit.

In “TITLE TK” Monica Bauerlein writes about the perilous moment we’re in, and why it’s so important that we raise $325,000 by the time November’s midterms are decided so we can be ready to throw everything we have at the big issues facing the nation no matter what happens. Please help MoJo’s people-powered journalism with a donation today.

$400,000 to go!

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