Bernanke: Prohibiting swaps will weaken risk mitigation of banks

Correct me if I am wrong, but I was not aware that there was risk mitigation taking place.  That is unless you take into account the put that taxpayers had shoved down their throat by the banks and governments.  I could mitigate risk too if I had a FREE PERPETUAL PUT!

Bernanke, in a May 12 letter to Senate Banking Committee Chairman Christopher Dodd, said the proposal, part of the Senate financial-overhaul bill, would harm the Fed’s ability to monitor systemic risk among financial institutions. He had previously spoken privately against the proposal crafted by Senator Blanche Lincoln, chairman of the Senate Agriculture Committee.

“Prohibiting depository institutions from engaging in significant swaps activities will weaken the risk mitigation efforts of banks and their customers,” [translation: much less $$$ for my pals Lloyd and Jamie] Bernanke wrote in the letter, according to a copy obtained by Bloomberg News. “Depository institutions use derivatives to help mitigate the risks of their normal banking activities,” he said in the letter, which was also sent to Republican Senator Richard Shelby of Alabama and Senator Kirsten Gillibrand, a New York Democrat.