Audit Notes: NYT CDS, Embargoes, Obama Folds

I had some reservation about the Times story on Greece and credit-default swaps this morning. Although I liked the idea of pointing out that Wall Street is making bets against Greece after helping it conceal its true indebtedness, I noted that the paper didn’t show that the CDS market was directly causing a rise in Greek bond spreads beyond what normal market forces were doing anyway with its debt crisis.

But Felix Salmon finds nothing redeeming here, just blistering the Times piece. And he has a nifty chart showing how Greek CDS prices didn’t noticeably lead its bond prices.

Meantime, Shannon D. Harrington of Bloomberg reports that the story may have been overhyped:

The credit-default swaps traders being blamed by German and French leaders for fueling fears of sovereign debt crises would be doing so with less than 1 percent of the governments’ outstanding debt being wagered.

— Any reporter who’s been hounded near to death by a flack with some snoozer exclusive will enjoy this video.

I will honor the embargo for the rest of my working life, as I have no intention of writing about your new “revolutionary software as a service for social-media companies that will change the way social-media marketing is done forever.”

(h/t Matthew Ingram)

— The Washington Post gets a nice scoop on the Obama administration, you guessed it, folding in the face of opposition to the Consumer Financial Protection Agency and the Volcker Rule.

President Obama’s economic team is now open to housing the consumer regulator inside another agency, such as the Treasury Department, though they still prefer a stand-alone agency. In either case, they are insisting on a regulator with political autonomy and real teeth so it can effectively enforce rules designed to protect consumers of mortgages, credit cards and other financial products.

The administration may also have to compromise on Obama’s recent proposal for a rule to limit risky activities at banks by prohibiting them from engaging in many kinds of speculative investments.

And, but of course:

Even as the administration is showing new flexibility, some senior executives in the financial industry have also been coming around, easing some of their intensive lobbying against the regulatory overhaul. Instead of trying to block the proposals for a consumer protection agency and curbs on risky investment practices, these executives are working more closely with Democrats to secure a deal the banks can live with.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum.