Financial Market Destabilization and the Role of Credit Default Swaps: An International Perspective on the SEC's Role Going Forward
Bibliographic record
Abstract
International financial market participants and regulators are watching as the United States attempts to come to grips with the most serious consequences of the crisis in financial markets. Multiple strategies are being used, including bailouts, bank stimulus packages, recapitalization of financial institutions, insolvency restructurings, mortgage programs, guarantees for interbank lending, and direct asset purchases. The causes of the financial turmoil are numerous and complex, but one underlying cause was activities in the credit derivatives market. The fragmentation of regulation over the U.S. financial system, with at least five oversight bodies, has arguably resulted in significant gaps in regulatory oversight. The treatment of credit default swaps is one of them. This Article explores the issue of credit default swaps, and the potential role of the Securities and Exchange Commission (SEC) going forward. Credit default swaps are the most common credit derivative product globally. The figures on the extent of the credit derivatives market vary, but they are all in the tens of trillions of U.S. dollars, of which about 80% are credit default swaps. Credit default swaps have been around for a number of years. They are financial instruments that were originally designed to manage risk exposure. However, a number of shifts in the market, including a radical increase in the speculative aspects of the market, the diminution of credit ratings, and the shift in market share from banks to hedge funds, created problems that eventually contributed to a number of financial failures. The policy question now is how to preserve the positive risk management aspects of credit default swaps while slowing the speculative aspects of the market. In relation to the SEC, the question is, what is its oversight, policy, and enforcement role with respect to such derivatives? This Article is divided into three parts: - a discussion of credit default swaps, their recent role in financial markets and their effects on governance of corporations; - an examination of the role of the SEC historically in respect of derivatives and the current question of whether it should acquire regulatory power over credit default swaps; and - suggestions for additional policy considerations to guide the SEC's deliberations as it charts a course for the future.
Fetched live from OpenAlex and de-inverted. Abstracts are not stored in this database: the inverted indexes are 8.6 GB of the frame’s 9.3 GB of text, and the host has 13 GB free.
How this classification was reachedexpand
Full frame machine prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. The Gemma side is a direct model label for every work in the frame, read from the title-only record. The Codex side is a classifier learned from the 10,348 direct Codex labels and calibrated to design-weighted sample rates; fields without enough sample support carry no Codex call. Candidate is the union of the two sides; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels.
Distilled classifier scores by category (both heads)
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.004 | 0.006 |
| Meta-epidemiology (narrow) | 0.001 | 0.000 |
| Meta-epidemiology (broad) | 0.001 | 0.001 |
| Bibliometrics | 0.002 | 0.002 |
| Science and technology studies | 0.002 | 0.011 |
| Scholarly communication | 0.012 | 0.013 |
| Open science | 0.001 | 0.003 |
| Research integrity | 0.011 | 0.009 |
| Insufficient payload (model declined to judge) | 0.007 | 0.001 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; a candidate call from one source (direct Gemma or distilled Codex), not a consensus.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".