Submitted by Walker Todd, Sep 28, 2008 12:23

Write your congressman and suggest that over-the-counter derivatives issuance and trading be suspended until the current mess is unraveled. Martin Mayer (the financial writer) has suggested that the freeze should apply to final settlement of trades and claims. You want clearing to proceed to a point where net positions can be determined, but then you want any final round of payments or collateral transfers to occur only after the authorities have decided what they are going to do with claims of all types against financial institutions. This article very nicely, I think, shows how certain credit default swap players are going to be able to go to the head of the line (comparable language, by the way, is in the Fannie and Freddie rescue bill passed this summer), and politicians need to be held accountable for allowing such a situation to occur. Ask your congressman whether this is the result he intended or whose potentiality he even was aware of.

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