September 1, 2011
(POLITICO) — Before the 2008 financial crisis, our country’s largest financial institutions were trading complicated derivatives, called swaps, in the shadows, which helped propel the economy into a downward spiral.
Though the crisis had many causes, it’s evident that swaps – created to lower risk for Main Street businesses – heightened risk on Wall Street. Further, the swaps market created the belief that certain financial institutions were not only too big to fail but too interconnected to fail. When AIG, Bear Stearns and others faltered or crumbled, it was the taxpayers who were left with the bill. It wasn’t just the financial system that failed; the regulatory system designed to protect the public also failed.
Read the rest of Chairman Gary Gensler’s Op/Ed in POLITICO.
Last Updated: September 1, 2011