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Chicago Tribune (July 19)

2012/ 07/ 21 by jd in Global News

“The Chicago-based futures industry needs to better protect its clients.” Unlike banks (backed by the FDIC) or brokers (backed by the SIPC), the futures industry lacks a backstop to protect customer accounts. Last year MF Global went bankrupt, with customers losing up to $1.6 billion of their own supposedly safely segregated funds. More recently, Peregrine Financial Group went bankrupt. Customer funds are again missing. “There is no substitute for a well-capitalized insurance fund covering customer accounts…. The industry’s version of the FDIC and SIPC needs to be put in place soon — before the next firm goes belly up and takes its customers’ money with it.”

 

Forbes (March 30)

2012/ 03/ 31 by jd in Global News

Derivatives contributed to the last financial crisis and “may still endanger the financial system.” Based on FDIC records, U.S. banks hold derivative instruments with “a nominal value of $250 trillion – or about 150 times the aggregate balance sheet equity of these same banks.”

 

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