Precisely: They were so upset when Brooksly Born wanted to have everything registered on an exchange because in 1996 because the banks evidently had by that time made a ton of money selling Swaps (insurance policies against default) they had no reserves to cover and did not want out in the open.
More to the point - without derivatives, that 30 year mortgage is going to have a double-digit interest rate.
That's not because anything is being hidden, it's because a number of institutions know full well the power of their campaign contributions. Without full faith and credit in a federal bailout, there is no way Goldman Sachs makes those huge bets with AIG.
they are making money in a fantasy world, the real holy grail. Of course they don't want that to be in the open/regulated. The matrix of fees must be mindboggling, fees on top of fees made from fluff.
What is plan B to securitize assets? If derivatives are the hot potato, there ya go, no one is lending.
I am not sure I understand how it work, but if OTC is not on exchange, then it is hidden, true? So not all people can see the bid/ask price, true? So this can make a very big spread for some people to make money on that.
the reason to put them on a regulated public exchange is so a third party can make sure these is enough capital to pay off the contract. it has little to do with bids and asks.