Finally

I've been waiting to hear what the Obama Administration will do about derivatives. Now the wait is over.

As the AP reports:

The proposal on credit default swaps and other derivatives would require the markets on which they are traded to be regulated for the first time, and for the buying and selling of these instruments to be conducted in ways that will foster greater oversight.

Credit default swaps, which trade in a $60 trillion global market without government oversight, are contracts to insure against the default of financial instruments like bonds and corporate debt. They played a prominent role in the credit crisis that brought the downfall of investment banking giant Lehman Brothers Holdings Inc. last fall and nearly unraveled AIG, forcing the government to provide more than $180 billion in support.

As I said last year, derivatives are little more than bets with your broker about something in the financial world, like playing the field at the craps tables or sports books at Ceasar's Palace. The idea is to create the perfect investment that will not lose money. Oh, but they do.

Wall Street is not the Vegas strip. It's time to rein these exotic, incomprehensible investments in and stop treating debt like an investment. Debt is debt.

And whatever happened to collateral? A line from a cult-favorite movie of mine, How To Beat The High Co$t of Living, says: "You know how banks operate. They only lend money to people who don't need it."