OTC Derivatives

I'm fully in support of not just regulating OTC derivatives but outlawing most of them entirely, but I don't think a Presidential executive order is the way to do it. These contracts are negotiated outside the exchanges, and I'm not even sure that the President has constitutional authority to sever or freeze contracts made by two private parties. It sounds too abrupt and too dictatorial, like changing the rules mid-game.The threat of a potential executive order would be like a sword hanging over the necks of those writing these contracts.

I don't have sympathy for these gamblers, but if the objective is to dismantle these time bombs of risk, then it should be done with a series of orderly measures. Issuing an executive order would be like pulling the emergency brake in a car going 100mph.

The details of these exotics are not subject to much disclosure currently- before the President could shut this market down, he would first have to see what what was in it. Since the communications related to these contracts would certainly be international ( and encrypted to an extraordinary degree), to shut this market down would first necessitate turning the full weight of the US surveillance/wiretapping apparatus against those writing them. What other tools of discovery does the government have?