Deregulation of the financial markets has been underway for years. The Bush Administration has pushed this agenda hard, but it's worth keeping in mind that it was President Bill Clinton who signed the Commodities Future Modernization Act of 2000. That law was most notable for overturning the ban on single-stock futures, but it did something else quite significant: it settled a turf war between the Securities and Exchange Commission and the Commodity Futures Trading Commission over the regulation of credit default swaps by putting the market largely out of bounds for both regulators.

Fast forward to 2008, and the country now has a virtually unregulated CDS market that has grown truly enormous, from $144 billion a decade to about $55 trillion of notional value today. Not only is the market unregulated, it is without even a central clearinghouse, making the market opaque even to industry participants with huge amounts at stake. One reason cited for Lehman's cascading effect on the market is the investment bank was a huge CDS player and nobody knew exactly which firms had made trades with Lehman and for what amounts.

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