Deregulation by President Clinton?

Democrats are blaming Republicans for our current crisis because of their cry for deregulation. Deregulation is part of the problem, but new financial derivative products were actually deregulated by President Clinton, at the recommendation of The Presidents Working Group of Financial Markets. You can bore yourself for an hour here.

Government is unable to regulate markets, they are only able to assign blame after a crisis. Never has this been so evident in the emergence of complex financial derivatives created in the last 20 years.

The financial derivatives market consists of hundreds of trillions of dollars. Credit default swaps, a portion of the derivatives markets, consist of over $60 trillion dollars. They are underfunded, unregulated bets between two entities regarding the failure of a third business entity. They are not a security such as a stock or a bond, nor are they an insurance policy. This is important to know since regulations apply to the trading of securities, and the selling of insurance.

Why isn't there regulation of these out of control derivatives. Simply because of a law passed in 1999, on the recommendation of the Clinton Administration, to clear up the concern members of the Department of Treasury, the Federal Reserve, and members of the Clinton Administration had regarding the gray area of regulation of these derivatives. They argued and created into statute, through the passage of the Commodity Exchange Act, CEA, new rules to prevent oversight from either the Securities Exchange Commission, or State Insurance Regulators in order to encourage continual growth of these derivative securities.

I am not suggesting the CEA is the entire cause of the current financial crisis. However, it is clear that this is not a deregulation issue of the Bush economic package. When Democrats suggest the crisis is caused by Republicans deregulation measures and that we shouldn't want "more of the same 8 more years of Bush economic programs," they are clearly deflecting blame on Democratic proposals.