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Agricultural and Food Policy
 Agri Outlook Radio
Number 210
House Committee on Agriculture - Committee Examines Role of Credit Derivatives in the U.S. Economy (2:24 minutes)
Audio/Video Script:
Robert Coats, Ph.D.
Extension Economist and Professor
University of Arkansas, Division of Agriculture
I’m Robert Coats Extension Economist University of Arkansas Division of
Agriculture.
House Committee on Agriculture examines role the of credit derivatives in the
U.S. economy.
On October 15, 2008 the House Agriculture Committee held a hearing to review
the following:
- First, the role of credit derivatives in the U.S. economy,
- Second, the role credit derivatives may have played in the
recent credit and financial crisis affecting U.S. and markets around the
world, and
- Third, the role credit derivatives may have played in the
series of recent failures government takeovers of large financial
institutions that engage in credit derivative transactions, including
American International Group (AIG), Lehman Brothers, Bear Stearns, and
Washington Mutual, among others.
House Agriculture Committee Chairman Collin C. Peterson of Minnesota said.
“We need to get a handle on these credit default swaps and determine the
regulatory modifications that are needed to minimize the systemic risk to the
economy that I am concerned they pose right now. There is an estimated $55
trillion in credit default swaps somewhere out there, but no one knows for sure
if any of these swaps offset each other, exactly who is on the hook for these
swaps, who is trading with who and on what terms; and worst of all, no one has
any idea who is solvent and who is upside down. The first step we need to
take is to shed some light on just how the unwinding of these obligations will
take place.”
The Committee heard testimony from two panels of witnesses, comprised of
government regulators, academics, and industry stakeholders. Witness
testimony is available on the
House Committee on Agriculture website.
A full transcript of the hearing will be posted on the Committee website at a
later date.
WITNESS LIST
Panel 1
- The Honorable Walter Lukken, Acting Chairman, Commodity
Futures Trading Commission, Washington, D.C.
- Mr. Erik R. Sirri, Director of Division of Trading and
Markets, Securities Exchange Commission, Washington, D.C.
Panel 2
- Mr. Robert Pickel, Chief Executive Officer, International
Swaps and Derivatives Association, Washington, D.C.
- Professor Henry Hu, Professor, University of Texas School of
Law, Austin, Texas
- Mr. Johnathan Short, Vice President and General Counsel,
Intercontinental Exchange, Atlanta, Georgia
- Ms. Kim Taylor, Managing Director and President, CME Group
Clearinghouse, Chicago, Illinois
This has been Robert Coats Extension Economist University of Arkansas
Division of Agriculture.
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Food Policy Radio
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