For the past year, as politicians have grappled to get their heads around the perils of complex finance, many have been seeking a handy magic wand that might produce a reform fix (or, at the very least, give them something they can explain and wave to voters on prime-time television.)
The phrase “clearing house” has often been regarded as one such seemingly magic wand. After all, even the most financially illiterate politician can see trillions of dollars are tied up in derivatives deals. They can understand how the complexity of these contracts contributed to the autumn 2008 financial panic (even if derivatives per se did not cause it).
Thus the idea of putting these opaque contracts into a central clearing forum, where they can be properly monitored and settled even amid a panic, has now turned into the regulatory equivalent of apple pie.