Carefully worded public statements that skate around the heart of controversial issues have been the norm for some U.S. industry associations and lobbying groups. The International Swaps and Derivatives Association has been taking its gloves off recently, most noticeably in an e-mail and blog post entitled “It’s Time To Stop The Nonsense.”
The group put a foot down on what it considers irresponsible media coverage of the derivatives industry as a whole, and on a more granular level the dangers of credit default swap exposures to the financial system. The target of the gripe is a column by a physicist in Bloomberg BusinessWeek this week which stated that credit default swaps may have already spun an invisible web of credit exposures between banks that “could cause financial chaos.” The author, Mark Buchanan, said that CDS needs to be brought onto exchange for greater transparency.
This web, says ISDA, probably doesn’t exist and is definitely not invisible. The Depository Trust and Clearing Corp. maintains an information warehouse of 98% of credit default swap exposures in the market, it says.
This is the latest in a recent line of media comments, all generally in the same vein of pointing out the miscues of financial journalists and/or academics. This one, though, pulled a few less punches than last time. “So please, let’s stop the nonsense,” it reads. “There are serious issues to be discussed regarding global regulatory reform and the financial markets.”
An ISDA spokesman said the strategy is part of an effort to disseminate ISDA views across a broader platform of social media devices, such as podcasts, which the group will begin rolling out soon