Fed Downplays Derivatives Risk: Derivatives dealings by banks and securities firms are unlikely to lead to losses requiring a taxpayer bailout, Federal Reserve Board Chairman Alan Greenspan said. That's not to say the derivatives market is without risks, Greenspan told a House hearing. Perhaps the greatest danger would result from Congress passing ill-conceived regulations that harm the $12-trillion market, making it more difficult for major corporations to shed some of their financial risk, he suggested. The risk of overzealous regulation could result in "a stagnant economy," Greenspan said. Congress is concerned because the complex financial contracts have been linked to a string of multimillion-dollar losses at corporations in recent weeks.
From Times Staff and Wire Reports
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