Posted by Susan Veligor on May 5, 2014
A recent article in the Wall Street Journal reported on big banks maneuverings around the pending “bank swaps” regulation. Swaps are derivative instruments whose purpose is to transfer risk to a third party. The new regulation is intended to make swaps activity more transparent and to protect the US financial system from banks amassing huge derivatives positions in non U.S. markets. The changes being implemented by the big banks are shifting their liabilities to offshore operations. This doesn't necessarily mean the banks won't be liable, only that it could make their balance sheets appear healthier than in reality. Reminds us of the 2008 debacle . . .