By Sarah N. Lynch of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)--Several prominent players in the over-the-counter derivatives industry told lawmakers Tuesday that the role of credit-default swaps in the financial crisis has been greatly exaggerated.
In testimony before the Senate Committee on Agriculture, Nutrition and Forestry, International Swaps and Derivatives Association Chief Executive Officer Robert Pickel and the former president of Bear Stearn's (BSC) brokerage arm, Richard Lindsey, both suggested that problems from subprime loans, and not credit-default swaps, are the root cause of the country's economic woes.
"If corporations or individuals use derivatives to expose themselves to an inappropriate level of risk then those corporations or individuals have created real risks in the economy," said Lindsey, now president of the consulting firm Callcott Group LLC. "Those risks were not created by derivatives. They were created by individuals or corporations making bad choices when using derivatives."
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