Propping Up Credit Swaps' Reputation
March 16, 2009
The credit derivatives sector has been called casino capitalism and a time bomb by critics, many of whom point to the instruments as the primary cause of the current financial crisis. But several banks, seeking to change that image, have formed a coalition and hired a Washington D.C.-based communications firm, Prism Public Affairs.
According to Prism partner Richard Ades--a senior speech writer and adviser to Secretary of Agriculture Dan Glickman in the Clinton administration--the firms are Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, JP Morgan Chase & Co. and Morgan Stanley. The group--the Coalition for Business Finance Reform--will work cooperatively with the Securities Industry & Financial Markets Association to get its message out, he added.
"Our purpose will be to educate folks in Washington and elsewhere, helping them to understand how the corporate side of the credit default swaps market works and what they mean for our recovering economy," said Ades. The Derivatives Markets Transparency and Accountability Act, introduced in February by the chairman of the House Agriculture Committee, Rep. Collin Peterson, D-Minn., has heightened speculation about the degree of regulation that ultimately will be introduced to the market, said Ades.
The coalition expects to unveil its name and launch a Web site as early as this week. "We expect to get active sooner rather than later because legislation is moving toward Capitol Hill," he said.
