OPENING STATEMENT OF REP. EDWARD J. MARKEY (D-MA) SUBCOMMITTEE ON FINANCE AND HAZARDOUS MATERIALS HEARING ON IMPROVING PRICE COMPETITION FOR MUTUAL FUNDS AND BONDS TUESDAY, SEPTEMBER 29, 1998
"How could this have happened? Four years ago, the General Accounting Office, at my request, submitted a report to Congress on derivative financial markets. In that report, the GAO called for a series of structural and regulatory reforms in the financial markets, some of which were aimed at assuring that internal controls and risk management systems in derivatives dealers and end-users were improved so that we could avoid precisely the type of crisis that provoked last week’s last minute emergency meeting at the New York Fed.
..The failure of Long-Term Capital Management raises serious questions about whether the assertion that market forces and incremental actions by the regulators are sufficient to deal with the potential for financial derivatives to destabilize U.S. and world markets. If the Federal Reserve Bank of New York is forced to convene an emergency meeting of the heads of Wall Street’s largest securities firms and banks the day before LTCM was reportedly going to collapse, this suggests that the firms and the regulators have forfeited the privilege of secrecy."