Why Banks' Derivatives Fears are Overdone at Golden Networking's Derivatives Conference in New York

June 21, 2010 - PRLog -- Banks worry about a still-alive proposal by Arkansas Sen. Blanche Lincoln to force derivatives activity into separately capitalized affiliates within banks. However, The Wall Street Journal points out, "even if U.S. banks lose business to European rivals, any slimming of derivatives risk within the biggest U.S. banks could benefit taxpayers and the wider financial system. After all, the concentration of derivatives in big U.S. banks, and the interconnections they bred between institutions, was a major reason behind the government bailout of the financial system." This will be matter of discussion at Golden Networking's Derivatives Leaders Forum 2010, "Strategies for Increasing Profits under an Evolving Regulatory Framework" (http://www.DerivativesLeadersForum.com), July 22nd, 2010, New York City.
The report by The Wall Street Journal continued with the rationale for the rule to be applied: "Currently, J.P. Morgan Chase, Citigroup, Goldman Sachs, Morgan Stanley and Bank of America hold 96% of the $293 trillion in derivatives held by the top 25 bank holding companies, according to the Office of the Comptroller of the Currency. But the impact of the derivatives curbs mightn't be as bad as big banks prophesize, especially since Sen.

Lincoln this past week further clarified her proposal and compromised on parts. She has made clear the proposal won't forbid banks from using derivatives or from hedging against their own risk coming from, say, making mortgages. Nor would it curtail their ability to write derivatives for banking clients. Rather it will affect derivatives used for trading and dealing purposes. True, banks will have to hive off these activities into affiliates. And raising capital for those units could prove costly. But that only underscores that banks don't necessarily hold enough capital for this business today, and counterparties also don't because they believe the government will rescue big banks. This means taxpayers subsidize banks' lucrative derivatives businesses. Instead, as Thomas Hoenig, president of the Federal Reserve Bank of Kansas City wrote in a recent letter to Sen. Lincoln, derivatives activities 'should be placed in a separate entity that does not have access to government backstops.' Just because Europe may continue to subsidize banks' derivatives business isn't an argument for the U.S. continuing to follow suit."

Derivatives Leaders Forum 2010 is produced by GoldenNetworking.net (http://www.goldennetworking.net), the premier networking community for business executives, entrepreneurs, investors and diplomats, founded by former McKinsey consultant and Columbia Business School MBA Edgar Perez. Upcoming Golden Networking's Forums and Business Receptions include:

·   High-Frequency Trading Happy Hour, (http://www.HFTHappyHour.com), July 13th, New York City

·   Distressed Investing Experts Forum 2010, "Analyzing and Valuing Distressed Companies, Securities and Real Estate" (http://www.DistressedInvestingExpertsForum.com), September 23rd, New York City

·   2nd China Leaders Forum, "Challenges and Opportunities for China's Economic Juggernaut" (http://www.ChinaLeadersForum.com), October 7th, New York City

·   Latin America Leaders Forum 2010, "Unlikely Oasis of Growth amid the Global Economic Crisis?" (http://www.LatinAmericaLeadersForum.com), October 21st, New York City

·   2nd Banking Leaders Forum, "Private Banking on the Brink of Transformational Change" (http://www.BankingLeadersForum.com), November 11th, New York City

·   Global Energy Leaders Forum 2010, "Proposals and Solutions for Today's Global Energy Challenges" (http://www.GlobalEnergyLeadersForum.com), December 2nd, New York City

·   2nd Private Equity Leaders Forum, "Setting the Stage for Radical Transformation in 2011 and Beyond" (http://www.PrivateEquityLeadersForum.com), December 9th, New York City

Golden Networking has compiled the insights of top experts and industry practitioners and produced DVD Video Packages for its Leaders Forums, including:

·   Distressed Investing Leaders Forum 2009 DVD Video Package, "The Most Comprehensive Guide for Any Investor in Distressed Assets", http://www.DistressedInvestingLeadersForum.com

·   Distressed Investing Leaders Forum 2010 DVD Video Package, "Extraordinary Opportunities Investors Cannot Afford to Pass", http://www.DistressedInvestingLeadersForum.com

·   High-Frequency Trading Experts Forum 2010 DVD Video Package, "Starting and Running a High-Frequency Trading Operation", http://www.HFTExpertsForum.com

·   Hedge Funds Leaders Forum 2010 DVD Video Package, "Generating Alpha in Challenging Times", http://www.HedgeFundsLeadersForum.com

·   High-Frequency Trading Experts Forum 2010 DVD Video Package, "Innovating and Profiting from High-Frequency Trading in 2010 and Beyond", http://www.HFTLeadersForum.com

Panelists, speakers and sponsors are invited to contact Golden Networking by sending an email to info@goldennetworking.net. Golden Networking has been frequently featured in the press, including recent articles in The New York Times, "Golden Networking Helps Job Seekers Make Overseas Connections" (http://www.nytimes.com/2009/11/07/nyregion/07network.html), Los Angeles Times, "Speed-addicted traders dominate today's stock market" (http://articles.latimes.com/2010/may/16/business/la-fi-new-exchanges-20100516), Reuters, "Revamp looms as trading experts huddle at SEC" (http://www.reuters.com/article/idUSTRE6504U820100601)  and Columbia Business School's Hermes Alumni Magazine, "10 Under 10" (http://www7.gsb.columbia.edu/alumni/news/ten-under-ten).

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