Comments on: The Collateral Boogeyman is back

By: NERA Doubles Down « Betting the Business

NERA Doubles Down « Betting the Business — Mon, 19 Mar 2012 10:03:44 +0000

[...] on this issue commissioned by lobbyists seeking to loosen the regulations–see here and here. Our critique of the earlier Keybridge study applies equally to NERA’s study: If you don’t back up your [...]

By: Betting the Business

Betting the Business — Mon, 18 Jul 2011 10:51:07 +0000

[...] of a firm went up—the lead study financed by the Coalition can be found here, and our critique here. Now that the Coalition has sensibly abandoned this argument, participants in the discussion should [...]

By: Historical fact and lobbying fiction on end-users and margins « Betting the Business

Thu, 07 Jul 2011 21:34:48 +0000

[...] earlier this year in a “study” commissioned by the Business Roundtable–see analysis here, here and here. Maybe that’s the point. Although the earlier work has been discredited, if the [...]

By: Wall Street’s Plastic — and Poison — Ivy - Elizabeth Palmberg - God's Politics Blog

Mon, 21 Feb 2011 15:46:56 +0000

[...] — kill jobs. This report’s analysis was, as MIT economics professor John Parsons blogged, a bogeyman based on premises that are “clearly not [...]

By: $6 Trillion in play: derivatives markets « political FAQ

$6 Trillion in play: derivatives markets « political FAQ — Fri, 18 Feb 2011 16:33:02 +0000

[...] As I discussed earlier this week elsewhere, the provocatively-titled Wall Street Journal article “Study: Strict Derivatives Regulation Could Cost 130,000 Jobs” echoing the “government regulations hurt business” talking-point was defused by professors John E. Parsons and Antonio S. Mello, who pointed out, “It’s always possible to ignore the system-wide purpose of a regulation and claim it is cost… [...]

By: MIT Bloggers and Sorkin Take Down a Derivatives Study « Compendium

MIT Bloggers and Sorkin Take Down a Derivatives Study « Compendium — Wed, 16 Feb 2011 21:15:01 +0000

[...] MIT’s John Parsons eviscerated the report, convincingly noting that it didn’t make any sense on a couple of levels (RTE updated [...]

By: OPISO » Deceptive Lobbying on Derivatives

OPISO » Deceptive Lobbying on Derivatives — Wed, 16 Feb 2011 18:21:10 +0000

[...] feel bad about that – but such duping is very dangerous for financial-system stability. (See this post by my colleague John Parsons, who cuts nicely to the analytical heart of the matter – and who [...]

By: Deceptive Lobbying on Derivatives « Livinglies's Weblog

Deceptive Lobbying on Derivatives « Livinglies's Weblog — Wed, 16 Feb 2011 17:52:07 +0000

By: Economix: Deceptive Lobbying on Derivatives | Il Neurone USA

Economix: Deceptive Lobbying on Derivatives | Il Neurone USA — Wed, 16 Feb 2011 16:00:04 +0000

[...] feel bad about that – though such duping is really dangerous for financial-system stability. (See this post by my co-worker John Parsons, who cuts easily to a methodical heart of a matter – and who also [...]

By: John Parsons

John Parsons — Wed, 16 Feb 2011 09:19:28 +0000

No, the cost won’t necessarily increase. First, because corporations already have to pay their relationship bank for the credit required to trade derivatives. An uncollateralized trade is equivalent to a package of two instruments: (i) a collateralized trade, and (ii) a line of credit for the collateral. A requirement to collateralize all trades is just a requirement to break that package into its components. The corporation posts the collateral on the trade with its relationship bank, and then turns around and gets the line of credit for the collateral from its relationship bank. Second, because the macro/systemic consequences of the reform are what determines the total credit and systemic risk in the system, which is what determines the total cost that has to be covered by corporation fees. If the total risk goes down, the total fees can go down, too. See our various posts on OTC Derivatives Reform for a fuller elaboration of these points, plus the seminar presentations referenced there.