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“While debating changes to Fannie Mae and Freddie Mac, Senate Banking Committee Chairman Chris Dodd (D-Conn.) told his colleagues: “Read this new book, ‘The Big Short.’” Senate Majority Leader Harry Reid (D-Nev.) was decrying Republican obstructionism on the floor when he said, “I recommend everyone within the sound of my voice to read the book.” It’s terrific for people who haven’t spent a lot of time on” the subject, Levin said. “My wife is really into it. I read it, marked it up for my staff, underlined it, made copies and asked them to read it.”

The Big Short A Hot Read On Hill [Politico]

Article courtesy of Dealbreaker

While Sen. Chris Dodd’s financial reform bill is one giant 1,300 page tome, it’s so vague that almost any financial product known to man will come under its purview.

That’ll create the “largest and most powerful crony system in history,” Cliff Asness, comic book collector, and his AQR colleague Aaron Brown write in their latest Op-Ed in the WSJ. (FD: Asness gave $4,600 to Dodd’s campaign in 2007, but only $409 last year.)

The definition of “swap,” for example, could entail anything from a Maxine Waters back rub to a Goldman CDO. There’s also no clearly defined parameters of what a “major swap participant.” You could buy one tiny swap contract and immediately be labeled an enemy combatant, and you don’t want to find out what that means.

In the bill, a “swap” is defined as “any contract or transaction that has financial, economic or commercial consequence involving purchase, sale, payment or delivery with any contingent clause.” We challenge lawmakers to think of any contract or transaction that doesn’t meet that definition—from buying detergent with a money-back guarantee to getting a rain-check at the car wash. If you maintain a “substantial” net position in swaps, or if your failure to perform under your swaps could cause “significant” losses, you are considered a “major swap participant.” And you really don’t want to be one considering how you’ll be regulated.

Article courtesy of Dealbreaker

Article courtesy of Dealbreaker

$$$ AIG CDOs Sold to Federal Reserve Placed on Review for Downgrade by Moody’s [Bloomberg]

$$$ Goldman Sachs Sued for Not Divulging Madoff Ban to Investor [Law.com]

$$$ Fallen trader has run out of options [Sydney Morning Herald]

Article courtesy of Dealbreaker

$$$ Chris Dodd’s Financial Reform Bill Is A Road Map Leading Directly Into The Next Crisis [BI]

$$$ Jack Grubman to Sell Townhouse for $19.6 Million [NYO]

$$$ Hedge Funds Fail When ‘Rock Stars’ Are In Charge [Bloomberg]

Article courtesy of Dealbreaker