9/16/2009

Patrick Parkinson, a senior adviser to the Federal Reserve Board, said that lawmakers' push to clear over-the-counter derivatives on a central clearinghouse might result in unintended consequences. Parkinson said the effort might put pressure on "central clearing counterparties to clear a wider range of derivatives than would be safe to clear." Clearinghouses have been able to absorb default shocks because they were working in liquid markets, he said. "Their excellent track record can't be taken for granted."

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