Head of $25 Billion Templeton Fund: Derivatives Will Cause Another Crisis

I have repeatedly warned that credit default swaps are not meaningfully being reigned in, and that the failure to do so will cause future problems.

Mark Mobius – executive chairman of the $25 billion dollar Templeton asset management fund – agrees:

A new financial crisis will develop from the failure to effectively regulate derivatives and the extra global liquidity from stimulus spending, Templeton Asset Management Ltd.’s Mark Mobius said.

“Political pressure from investment banks and all the people that make money in derivatives” will prevent adequate regulation, said Mobius, who oversees $25 billion as executive chairman of Templeton in Singapore. “Definitely we’re going to have another crisis coming down,” he said in a phone interview from Istanbul on July 13.

As the CIO of Bank Julius Baer notes, regulators aren’t even trying to exert real control over derivatives:

“Banks have lobbied hard against any changes that would make them unable to take the kind of risks they took some time ago,” said Venkatraman Anantha-Nageswaran, global chief investment officer at Bank Julius Baer & Co. in Singapore. “Regulators are not winning the battle yet and I’m not sure if they are making a strong case yet for such changes.”

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