Quote of the day: offshore entities were behind the crisis

From Gary Gensler of the U.S. Commodities and Futures Trade Commission (CFTC)

“It was financial institutions operating complicated swaps businesses in offshore entities that nearly toppled the U.S. economy” in 2008, Gensler said.

This is from a Bloomberg story looking at how banking lobbyists and lawyers have seized on a footnote in a policy statement by U.S. regulators, which they hope will provide them with an international offshore loophole to help them get around rules designed to increase transparency of swaps trade and to make the financial system safer.

We believe that Gensler, like TJN, takes an approrpriately broad view of what and where 'offshore' is, unencumbered by political correctness and fears of offending anyone. We believe he is speaking it like it is. And the number one offshore jurisdiction for U.S. financial regulators has been, for the past half century or so, the City of London.

On the broad subject of using the offshore system to get around derivatives regulations, we co-signed a letter in July to top officials in different countries, pressing for strong and appropriate regulation of global derivatives markets, and arguing against the creation of offshore escape routes from regulation. For more background in this general area, see here.

One more for our Economic Crisis + Offshore page. Any source