Comment Text:
I believe that the biggest problem with derivatives is that any person or entity can purchase a derivative on just about anything. I believe that there should be some sort of valid reason for anyone to make such a purchase just like in the insurance arena you must have an insurable interest. I cannot obtain insurance on my neighbors house or life because I do not have a recognized insurable interest in either.
A third party who does not own a bond should not be allowed to obtain insurance against default for that bond. The great recession would not have occurred if not for all the derivatives that were obtained by person or entities with no direct interest in the underlying obligation.
Thank you for allowing me to comment.
Mike Stone
