Bailout funds miss the point: Joseph Mason column

Regulators should attempt to harness the beneficial qualities of credit default swaps, instead of viewing them with suspicion for their perceived role in the recent sovereign crisis.

Among the most glaring problems in the Dodd-Frank financial reform bill is the ‘living will’ provision requiring banks to pre-plan bankruptcies and the Federal Deposit Insurance Corporation’s resolution paradigm for non-banks. But the more fundamental problem stems from the growing realisation that those provisions are still only ex-post reactions to distress, which do not support or encourage orderly reorganisation of weak firms.

Putting aside for a moment inter-agency disagreements which