It's time to think about re-regulation of the financial industry and keep notes.
Here is question one:
Should one bank speculate in the credit(s) of its
- -trading partners
- -clearing partners
It would seem like there is a plain conflict of interest, absent a "Chinese Wall".
Question two:
How should the financial reporting disclosures of these ... contingent liabilities / assets ... be changed?
Should it matter how something is accounted for, if you write a credit-enhancement (or other derivative inducement) on a product you are selling yourself, versus one that is arms-length? Should one be more conservatively accounted for than the other?
...more to come ...
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