[Video] Talking Derivatives Reform

From Bloomberg Law, a discussion with Tangent Capital Partners’ Chris Whalen and Fusion IQ’s Barry Ritholtz – “two of the brightest guys in the business” according to host Lee Pacchia – on the subject of reform in the multi-trillion dollar derivatives market.

The money quotes (and there are many):

  • “[The derivatives market] is not just bigger than the $70 or so trillion GDP, it’s a multiple, depending on who you speak to. It’s 5X or 10X.” (Ritholtz)
  • “You want to begin to regulate derivatives? Simple: repeal the Commodities Futures Modernization Act and suddenly this becomes like every other financial instrument.” (Ritholtz)
  • “[Derivatives are] a deliberate attempt by the Wall Street firms to not only escape not only regulation, but to escape transparency in a public sense.” (Whalen)
  • “Trust me – this will blow up again. You can’t have a couple of hundred trillion dollars in derivatives, with the same kiddies playing with their books, and not have it eventually blow up.” (Ritholtz)
  • “The thing is the big banks aren’t that profitable. The supernormal returns that they earn from derivatives subsidize the rest of the business.” (Whalen)

Don’t watch it right before you go to bed, though…

[Link: Ritholtz: ‘Dot Com Bonus Envy’ Stymies Wall St. Reform