Unregulated Derivatives Total $220 Trillion
While the financial media have their microscopes on Federal Reserve language like "measured", statements like these are practically ignored. "The rapid proliferation of derivatives products inevitably means that some will not have been adequately tested by market stress."
"Over-the-counter derivatives traded privately between investors are largely unregulated. The global over-the-counter derivatives market is estimated to have a value of $220 trillion, Greenspan said." You shouldn't need any coffee after that comment.
"Concerns about potential market disruptions posed by the two mortgage giants 'will remain valid until the vast leveraged portfolios of mortgage assets held by Fannie and Freddie are reduced and the associated concentrations of market risk and risk-management responsibilities are correspondingly diminished.'"
"The Fed continues to be concerned that the relatively small number of institutions that act as dealers in derivatives markets may pose risks. In particular, the Fed worries what would happen if a large dealer suddenly had to exit the market."