Mr. Chairman , MBA looks forward to working with the committee on new consumer protection and regulatory modernization legislation as these proposals develop .
''' Goldman Sachs and AIG would continue to argue about Goldman 's marks , even as AIG would continue to post collateral that would fall short of Goldman 's demands and Goldman would continue to purchase CDS contracts against the possibility of AIG 's default .
credit ratings introduced systemic risk into the U.S. financial system and constituted a key cause of the financial crisis .
Finally , Mr. Chairman , a fourth priority is to address the basic vulnerabilities and our capacity to manage future crises .
Under the SEC 's recommended approach , securities-related OTC derivatives markets would be subject to oversight and supervision to ensure there are no gaps .
As a result , participants have a strong incentive to ensure the clearing agency maintains highly effective risk management policies and procedures .
Our proposed Financial Services Oversight Council would bring together the heads of all the major Federal financial regulatory agencies , including the Federal Reserve , the SEC , etc. .
--------------------------------------------------------------------------- \ 3 \ Primary dealers are broker-dealers that trade in U.S. government securities with the Federal Reserve Bank of New York .
This authority added to the Federal Reserve Act of 1932 was intended to give the Federal Reserve the flexibility to respond to emergency conditions .
2489 Goldman used this structure to design customized CDOs for clients interested in assuming a specific type and amount of investment risk .
Banks also reinfected themselves with subprime risks by buying private-label RMBS and CDOs and effectively taking those risks back on their books .
During the housing bubble , rating fees on private-label RMBS and CDOs were the fastest-growing sector of the rating agency business .
The stated goal of AIG for the proposed transactions in this third element of the plan was to provide $ 20 billion of liquidity to AIG .
Specifically , the New York Insurance Department is the primary regulator for 10 of AIG 's 71 U.S. insurance companies : American Home Assurance Company , American International Insurance Company , AIU Insurance Company , AIG National Insurance Company , Commerce and Industry Insurance Company , Transatlantic Reinsurance Company , American International Life Assurance Company of New York , First SunAmerica Life Insurance Company , United States Life Insurance Company in the City of New York , and Putnam Reinsurance Company .
For example , the Treasury 's plan noted that 94 percent of high cost mortgages were made outside the traditional banking system .
2/18/2008 document prepared by Goldman Sachs , outlining the parties serving each role in Goldman underwritten CDOs , GS MBS 0000004337 .
The scope of government intervention on behalf of AIG has created enormous public interest and acute attention by policymakers .
Regulators have to work with the industry to reduce the extent to which business losses are triggered when the institution 's debt is forced to bear losses .
In May 2007 , as CDO sales slowed dramatically , Goldman became concerned about the lack of sales prices to establish the value of its CDO holdings .
1624 Mr. Birnbaum 's acquisition of a large net long position in the ABX was viewed negatively by Goldman senior executives .
My testimony today on the regulation of OTC derivatives will reflect the SEC 's perspective as the country 's capital markets regulator .
Mr. Chairman , as we move forward with regulatory reform , we should make every effort to strike the right balance between maintaining market stability and preserving useful innovations in the U.S. financial services industry .
Hedge Funds as Financial Investors One of the most important roles that hedge funds play in our economy is that of investor .
More specifically , issues have been raised regarding whether CDS created the financial crisis and/or played a significant part in the Bear Stearns , Lehman Brothers , and AIG situations .
-LRB- 4 -RRB- How Goldman Shorted the Subprime Mortgage Market Having provided an overview of Goldman 's shorting activities and CDO activities in the years leading up to the financial crisis , this next section of the Report provides detailed information about how Goldman shorted the subprime mortgage market .
Over time , banks and securities firms used securitization to mimic banking activities outside the regulatory framework for banks .
These products and institutions escape Federal regulation yet often lead to Federal problems such as our current economic and foreclosure crisis .
The CSE regime was also tailored to reflect two fundamental differences between investment bank and commercial bank holding companies .
In its capacity as consolidated supervisor of AIG , the OTS had the authority and responsibility to evaluate AIG 's CDS and securities lending businesses .
AIG 's ability to take large positions appears to stem primarily from a failure of AIG to follow widely used , generally accepted best practices with respect to collateralization .
Views on Securitization Policy and Market Reform Initiatives Numerous policy and market reforms aimed at the securitization market have been advanced in response to the broader financial market crisis .
It also means increased accountability , disclosure and transparency to ensure that consumers and investors understand the rules of the road regarding their transactions .
OTS will continue to focus on Residential Mortgage Backed Securities exposures and the ultimate performance of underlying mortgage assets .
AIG 's core business segments fall under four general categories -LRB- e.g. , General Insurance , Life Insurance and Retirement Services , Financial Services , and Asset Management -RRB- .
2197 Even before the actions taken by regulators in March 2007 , Goldman was aware of the poor quality of at least some of Fremont 's loans .
federal reserve transparency Let me close today with an update on the Federal Reserve 's initiatives to enhance the transparency of our credit and liquidity programs .
Mr. Hu , '' The standard process of modern financial innovation involves the OTC derivatives market as being the hothouse for financial innovation .