Another Piece of the 'Collapse Puzzle'

And you never heard of it...

Immediately after the CFMA legislation was passed, a few observers raised concerns. Frank Partnoy, a former derivatives trader at Morgan Stanley (now law professor at the University of San Diego), is the author of ”F.I.A.S.C.O.: Blood in the Water on Wall Street’,’ a 1997 book warning about the danger of derivatives. In 2000, referring to CFMA, he noted: (writes Ritholtz)...

“The new bill’s second impact, in the swaps market, is less direct but still worrisome. The act ends an argument about whether swaps qualify for regulation by making it clear that they are not regulated if a participating company or individual has $10 million in assets. That means that the swaps activities of most companies and mutual funds are not regulated. Yet few investors know what swaps are. And there’s almost no publicly available information about specific trades in this market, now bigger than many stock or bond markets. By contrast, futures trading takes place on exchanges; an investor can find closing quotes for futures in a newspaper’s financial section.”

The Ritholtz item was written in 1997...

FYI, CFMA was pushed mostly by (R) pols with a few (D)'s tossed in--and signed by Bill Clinton.

And "Mr. Imaginary Recession," Phil Gramm, added a little language which helped...

.....Enron.