Market participants enter into swaps for a reason: swaps provide benefits. It would be preferable for regulators to devise a regulatory scheme that maximizes the benefits of swaps to the economy (including to issuers that are the subjects of those swaps) rather than one that minimizes the number of swap transactions.

Firms doing retail business should be sure to implement procedures that (i) place the additional restrictions on salespeople concerning recommendations made to seniors, (ii) conduct ex-post-trade reviews of purchases made by seniors, and (iii) conduct pre-transmission reviews of free credit transfers made from the accounts of seniors. That said, it seems fair to ask how far the government should be allowed to go in requiring financial institutions to play an in loco parentis…

Banking regulators seem to respond to any examination of risk with a proposal to limit the scope of the banking activity. This line of reasoning ignores the potentially important benefit of these activities, including the ability to make a profit, the potential diversification of a bank's revenues and the benefits of allowing a bank to spread its operational costs by utilizing its banking skill set for a broader range of activities.

If these financial reporting requirements are adopted, how long will it be before the regulators impose actual capital requirements? Let us know what you think!