Released: September 24, 2008

SEC chief urges oversight of credit-default swaps

Source: Kevin McCoy, USA Today

Congress should approve federal oversight of credit-default swaps, an unregulated, $62 trillion market of investment contracts that have been cited as a factor in the nation’s financial crisis, the nation’s top securities regulator said Tuesday.

Testifying at a Senate Banking Committee hearing, Securities and Exchange Commission Chairman Christopher Cox described the lack of oversight as a potentially costly mistake Washington should address “to enhance investor protection.”

Credit-default swaps are insurance-like contracts issued to cover potential losses on corporate debt, municipal bonds or mortgage securities. Typically sold by banks and hedge funds, they are designed to provide protection against any defaults.

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