GOVERNOR PATERSON ANNOUNCES PLAN TO LIMIT HARM TO MARKETS FROM DAMAGING SPECULATION

Governor David A. Paterson today announced that New York State will, beginning in January, regulate part of the credit default swap market which has to date been unregulated and has been a major contributor to the emerging financial crisis on Wall Street. Governor Paterson also called on the federal government to regulate the rest of the massive $62 trillion market.

This action is similar to one recently taken by the federal government that tightly restricts “short selling,” or profiting from falling stock prices. The state action applies to credit default swaps which are a means of profiting from falling values of bonds. Under the direction of Governor Paterson, the New York Insurance Department today issued new guidelines that, for the first time, establish that some credit swaps are insurance and therefore subject to state regulation. More...