Regulators, Industry Spar Over Meaning of 'Swap'

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WASHINGTON (Reuters) - As Alabama's Jefferson County teeters closer to bankruptcy, U.S. regulators and the securities industry are locked in a struggle about the oversight and very nature of the derivatives that helped bring the county to this pivotal point.

Jefferson County entered the interest rate swaps hoping to lower the cost of its sewer bonds. Instead, it was so overwhelmed paying the obligations that it may have to file for bankruptcy as early as Friday [Aug. 29]. The county's outstanding sewer debt stands at $3.2 billion.

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Regulators, Industry Spar Over Meaning of 'Swap'

In a swap, two parties exchange interest rate payments, with one paying a fixed rate and the other a floating rate usual...

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