And, finally, we need to start addressing the risks posed by derivatives and other complex financial products.
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Barclays has also been caught up in another investigation, relating to the mis-selling of complex financial products - interest rate swaps - to small businesses.
Implementing the change only for direct investments will allow regulators to study the impact of the change prior to lifting the ban for more complex financial products.
That led nowhere, but in 2003 and 2004 AIG settled several cases in which it was accused of helping corporate clients massage their earnings numbers through complex financial products.
But much of it was due to the irresponsibility of large financial institutions on Wall Street that gambled on risky loans and complex financial products, seeking short-term profits and big bonuses with little regard for long-term consequences.
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His point was that much of the explosive growth in the trading of complex financial products - CDOs, ABSs, CDS, EFTs and so on, until we were all alphabetty crazy - may have been (in his words) socially useless.
It will go wider than just the attempted manipulation of interest rates for which Barclays was punished by regulators last week, to presumably include the mis-selling of PPI insurance and the inappropriate sales of complex financial products called swaps that were sold to small businesses ( see this blog from last week for more details).
Khuzami also added five additional units to oversee various areas of the financial industry: asset management, large scale market abuses, complex derivatives and financial products, foreign bribery and corruption, and the municipal and public pension markets.
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The enforcement chief also created five specialized units to oversee the following areas: asset management, large scale market abuses, complex derivatives and financial products, foreign bribery and corruption, and the municipal and public pension markets.
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However, other factors, including a broader retrenchment in the willingness of investors to bear risk, difficulties in valuing complex or illiquid financial products, uncertainties about the exposures of major financial institutions to credit losses, and concerns about the weaker outlook for the economy, have also roiled the financial markets in recent months.
While acknowledging that Shariah compliant financial products can be complex, Stuart Levey, the Treasury Under Secretary for Terrorism and Financial Intelligence, has stated that such practices are monitored byfederal banking agencies and that the risk factors with Islamic banking are not unique.
Financial products remain complex and shadow banking continues to be unregulated, Min Zhu told bankers at the World Economic Forum.
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Selling financial products is much more complex than, say, selling cereal or soap, and the industry is highly regulated. it requires having people familiar with the products intimately.
It does not help that financial products are now so complex that it is very hard to make even an educated guess about the real value of a bank.
The introduction of financial products can lead to very complex responses in the entire system that cannot be understood or quantified in any clinical trial.
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Eventually as the financial world evolved and products became complex the rate was used for a much wider universe of products in order to have a more standardized benchmark.
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The upshot of a 231-page report on reverse mortgages released today by the Consumer Financial Protection Board is that reverse mortgages are complex products and difficult for consumers to understand.
Many people whose retirements went upside down in the Great Recession had been sold as opposed to bought those complex investment products that held the promise of outsized rewards but also came with the risk the investment houses and other financial institutions shifted onto them.
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