Ever since the financial crisis, the FRB has exercised far greater regulatory power than it did previously and, arguably, has done so without close Congressional supervision. Whether it has exercised this power well in the past, and whether it should continue to exercise this power only under light supervision, are two legitimate historical and political questions. Assertions about hypothetical rate policy, however, are fundamentally unprovable. How can the FRB demonstrate that the…

Governor Powell argues for expanded clearing even as he observes that banks are cutting down on providing clearing services (which will make it harder for market participants to hedge and exacerbate concentration risks), and that banks don't want to hold cash for customers who clear (a result that does not seem positive).

Mr. Powell's observation that a very large percentage of plain-vanilla swap trades are now centrally cleared is, for purposes of systemic risk, largely unimportant.…

With so many letters to work with, and the legal authority to change the terms, the FRB could have come up with a more memorable acronym than ORSOM. How about this one: "At Most 10"?

A = Access, T = Transparency, M = Market Support, O = Organization, S = Settlement, T = Technology, I = Information and O = Operations. I recognize that substituting 1O for IO is playing fast and loose with the language, but certainly, it would be within the FRB's authority to do so.…

By these remarks, Chair Massad joins several other regulators in acknowledging the substantial risks created by central clearing, including the huge concentration of risk to the financial system that results from clearing. In light of these belated admissions, and in recognition of Chair Massad’s (et.al.,) concerns over "unintended consequences" (see related news stories below), it would be prudent for the CFTC to declare a moratorium on any further imposition of a mandatory clearing…