https://en.wikipedia.org/wiki/Commodity_Futures_Modernization_Act_of_2000
The Commodity Futures Modernization Act of 2000 (CFMA) is United States federal legislation that ensured financial products known as over-the-counter (OTC) derivatives are unregulated, accelerating the collapses of major financial companies.
[1]
It was signed into law on December 21, 2000 by President Bill Clinton.
It clarified the law so most OTC derivative transactions between
"sophisticated parties" would not be regulated as "futures" under the Commodity Exchange Act
of 1936 (CEA) or as "securities" under the federal securities laws.
Instead, the major dealers of those products (banks and securities
firms) would continue to have their dealings in OTC derivatives
supervised by their federal regulators under general "safety and
soundness" standards. The Commodity Futures Trading Commission's
(CFTC) desire to have "functional regulation" of the market was also
rejected. Instead, the CFTC would continue to do "entity-based
supervision of OTC derivatives dealers."[2] These derivatives, including the credit default swap, are a few of the many causes of the financial crisis of 2008 and the subsequent 2008–2012 global recession.[3]
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