Systemic Risk Quotes

With government deregulation and the triumph of financial liberalization, the dangers of systemic risks, the possibility of a financial tsunami, sharply increased.

Derivatives are financial weapons of mass destruction.

In our view, derivatives are financial weapons of mass destruction carrying dangers that, while latent, are potentially lethal.

We've used derivatives for many, many years. I don't think derivatives are evil, per se, I think they are dangerous.

... trade in derivatives poses a mega-catastrophic risk ... derivatives are financial weapons of mass destruction that could harm not only their buyers and sellers, but the whole economic system.

AIG’s failure was possible because of the sweeping deregulation of over-the-counter (OTC) derivatives, including credit default swaps, which effectively eliminated federal and state regulation of these products, including capital and margin requirements that would have lessened the likelihood of AIG’s failure. The OTC derivatives market’s lack of transparency and of effective price discovery exacerbated the collateral disputes of AIG and Goldman Sachs and similar disputes between other derivatives counterparties. AIG engaged in regulatory arbitrage by setting up a major business in this unregulated product, locating much of the business in London, and selecting a weak federal regulator, the Office of Thrift Supervision (OTS).

The banking collapse was caused, more than anything, by bad government policy and the total failure of bad regulation, rather than by greed.

I sincerely wish we could see our government so secured as to depend less on the character of the person in whose hands it is trusted. Bad men will sometimes get in and with such an immense patronage may make great progress in corrupting the public mind and principles.

When the whole world is globalized, you're going to be able to set fire to the whole thing with a single match.

The major reform legislation, Dodd-Frank, was named after two guys bought and sold by special interests, and one of them should be shouldering a good amount of blame for the crisis.

Globalization is very difficult to understand and almost impossible to regulate.

No private enterprises should be allowed to think of itself as too big to fail. No taxpayer bailouts should allow executives or stockholders to relax.

I think, my generation, it's hard to have hope when you got a $700-trillion derivatives debt to pay and a bubble about to explode and $500 trillion worth of GDP.

We need sobriety, rationality, and civility in the discussions on the regulation of financial institutions so that the banks can return in a robust manner to their central role in funding the economy.

I think people have to be very careful with new ideas [in fiancé and economics]. What you need to worry about is when you have something that’s a really good idea, but you get too much of it too fast, like over-the-counter derivatives.

I think the bailouts in 2008 were wrong.

Several highly improbable and therefore unforeseen failures.

The market, as we're all painfully aware in the aftermath of the banking crisis, can be an idiot. It has no perception of right or wrong, or even sensible or insane. It sees profit.

I don't want to create a too-big-to-fail player.

I put forward a pretty general theory that financial markets are intrinsically unstable. That we really have a false picture when we think about markets tending towards equilibrium.

A.I.G. was even larger than Lehman, with a substantial presence in derivatives and debt markets, as well as in insurance markets.

I do have confidence that we're gonna be able to get it right. But it's not gonna be overnight. And there's no silver bullets to this. The fact of the matter is, is that we are suffering from a massive hangover from a binge of risk taking.

Separating out banks and investment banks right now under Glass-Steagall would have very big implications to the liquidity and the capital markets and banks being able to perform necessary lending.

We need to hold Wall Street accountable for issuing the kinds of deceptive loans that nearly brought our economy to its knees in 2008.

Debt, we've learned, is the match that lights the fire of every crisis. Every crisis has its own set of villains - pick your favorite: bankers, regulators, central bankers, politicians, overzealous consumers, credit rating agencies - but all require one similar ingredient to create a true crisis: too much leverage.