The clearinghouse rescue plan

As miracle cures go, clearinghouses for derivatives seem to be everyone’s favorite. By requiring that most swap contracts be settled daily through institutions that collect and spread financial risk, Congress and Treasury claim that we can all sleep better at night without fear of more AIGs. Sorry to break this reverie, but if this is true, why does Senator Chris Dodd’s financial bill give clearinghouses access to the Federal Reserve’s discount window? That’s the special Fed lending facility that is typically available only to banks that can’t get the funding they need elsewhere. Does the Senator know something most Americans do not?

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