A recent Office of Financial Research paper by Samim Ghamami and Paul Glasserman asks “Does OTC Derivatives Reform Incentivize Central Clearing?” Their answer is, probably not.
Both parties officially favor a restoration of Glass-Steagall, the Depression-era banking regulation that persisted until repealed under the Clinton administration in 1999. When both Parties agree on an issue, they are likely wrong, and that is the case here.
Here’s a nice article by Robert Henderson in the science magazine Nautilus which poses the question: “Can topology prevent the next financial crisis?” My short answer: No. A longer answer–which I sketch out below–is that a belief that it can is positively dangerous.