Regulators Target Banks' Use Of CDS To Game Capital Needs

Law360, New York (March 22, 2013, 3:40 PM EDT) -- Global regulators on Friday said banks were using the purchase of credit protection, including credit default swaps, as an improper way of getting around new capital requirements, and pushed forward a proposal that would force them to account for the costs involved in those hedges.

The Basel Committee on Banking Supervision, a panel of regulators from 27 nations including the U.S. and U.K., put forward a proposal that would require banks to record not just the benefits of purchasing CDS and other credit protection meant to...
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