*Due to continued interest the Johnson testimony, I have reposted the following:
Robert Johnson, Director of Financial Reform for the Roosevelt Institute, submitted his testimony in early October to the Committee on Financial Services as part of the hearing on reform of the over-the-counter derivatives market. Johnson's hard-hitting analysis of the potentially catastrophic faults in our financial system runs counter to a troubling trend of failing to address risk that has plagued the Committee's.
Johnson has grave concerns about loophole-riddled bill currently under review, describing it to me in a recent conversation as "Swiss Cheese." In his view, regulation of the "reckless" OTC derivatives market is crucial as its impact is so broad, forming "the very fabric of our financial system."
There has been a disturbing trend of attempts to silence voices like Johnson's. His original in-person testimony before the Committee was shut down after an outrageous five minutes by Melissa Bean, while industry players spoke at length. Johnson was forced to submit his full testimony in written form, but my attempts to have it published on the House website were met with a number of implausible excuses by staffers. Ken Silverstein reported the story of what appeared to be deliberate suppression on the Harper's Magazine website. Finally, amid a growing storm of outrage, the House added the testimony to its website.
Click here to read full text: Rob Johnson Testimony.
*For further reading on the dangers of relying on clearinghouses to remedy credit default swaps, see "The Fantasy of the Clearing House Magic Bullet" on Naked Capitalism.