Regulation Of Credit Default Swaps

Here we go again! Calamitous events are often catalysts for regulatory change. The market crash of 1929 spawned a spate of such changes, including the separation of investment banks and commercial banks under the Glass-Steagall Act of 1933 (relaxed in 1999 under the Gramm-Leach-Bliley Act) and the enactment of a trio of acts: the Securities Act of 1933, the Securities Exchange Act of 1934, and the Investment Companies Act of 1940. The Enron and WorldCom accounting scandals produced the Sarbanes-Oxley Act in 2002. The recent rescue of American International Group has sparked regulatory action in the State of New York in the hitherto unregulated "covered" credit default swap (CDS) market and could result in new regulation of the "naked" CDS market.