Now raising intellectual capital

What Agnes forgot to say


My colleague Agnes Crane has a good post up about the Justice Department’s investigation into potential pricing irregularities in the credit default swaps market. And she’s right in questioning whether this investigation will add up to much.

But there’s one other thing I would point out, which is that the investigation is a civil matter being led by the Justice Department’s antitrust division. If this were a criminal investigation, it would be a more serious matter.

The antitrust team at the Justice Department has an uneven track record. Often that depends on the political philosophy of the person sitting in the White House. Under the Bush administration, anti-trust was almost a four-letter word. However, it does appear that Obama administration plans to be more vigilant in cracking down on monopolistic practices.

But that being said, anti-trust investigations have a history of leading nowhere. That’s in part because the best enforcement lawyers at Justice tend to be on the criminal side.

The DIY way to track derivatives


With all the talk about greater regulation of derivatives, there already is one way for average investors to get a glimpse into this murky world of high finance–although calling it a glimpse might be overstating things.

A three-year-old electronic registry managed by The Depository Trust and Clearing Corporation currently captures information regarding more than 95% of the world’s credit default swap transactions. The DTCC gathers information on the parties to a CDS transaction, the name of the underlying bond that a CDS buyer is obtaining default insurance on, the value of the transaction and the termination date of the trade.