California Treasurer Calls for Ban on Muni Credit-Default Swaps
This article is for subscribers only.
California Treasurer Bill Lockyer said he wants regulators to prohibit municipal credit-default swaps because of concern that investors may use the instruments to manipulate the market and cost state taxpayers.
Lockyer, 69, said he would ban credit-default swaps, a type of derivative used to protect debt-holders against default, if he had the authority. He’s called on regulators to adopt capital-margin requirements to reduce leverage and to prohibit the speculative use of credit-default swaps -- the trading of debt-insurance contracts by investors who don’t own the securities.