By Jon H. Harsch
© Copyright Agri-Pulse Communications, Inc.
step – guaranteeing another all-nighter for Senate staffers – is to merge
Democrat expressing concerns about the
Wednesday morning’s markup,
· “. . . financial market oversight reform is the single most important factor in our long-term economic recovery; it will be the foundation for our nation’s financial future. We must reaffirm the integrity and soundness of our financial system. This stability is the only thing that will maintain our nation’s preeminence as a global leader in worldwide financial markets. Reform will also give comfort to consumers and businesses so they can trust our markets to determine fair prices and manage risk.
2008, our nation’s economy was on the brink of collapse. The greed and excess
on Wall Street spiraled out of control and families and small businesses were
left to pay the price.
· “At the heart of financial regulatory reform is reforming the over-the-counter derivatives market. Within a decade, this market exploded to $600 trillion dollars in notional value. We must bring transparency and accountability to these markets.
is not a partisan issue. I believe every Republican and Democrat in this body
is committed to doing what is right to put our economy back on track. All of us
are committed to creating jobs, to protecting
· “We Senators have a solemn obligation to protect our nation. This is no time for small fixes or tweaking around the edges. This is the time for bold change and big decisions about the future of our country and the global financial system.
· “This bill will bring 100% transparency to a currently unregulated, dark market. It will lower systemic risk through clearing and exchange trading and real-time price transparency. It will close loopholes and make sure that regulators forever have the authority to go after those entities that would evade the law.
· “We have an important but narrow end user exemption, appropriate restraints on the regulator where necessary, and provisions that recognize we are competing in a global financial world. This is a robust package that balances the needs of strong, meaningful reform and recognizes the importance of these markets.”
Ag Committee Ranking Member Chambliss, joined by Republican colleagues, lamented that after six months of bipartisan work on derivatives provisions, this effort was abandoned in favor of a last-moment bill drafted by Democrats on their own “behind closed doors.”
Chambliss commented that the bipartisan bill “required clearing of swaps by those entities contributing to systemic risk, a substantial change from current law; provided the Securities Exchange Commission (SEC) and the Commodities Futures Trading Commission (CFTC) with the authority to establish capital and margin requirements – an authority they currently do not have; allowed the CFTC to impose aggregate position limits – another new authority; and provided the much needed transparency that has been absent from the swaps market. This represents a 180-degree shift from current law.”
that “Just as important as the new regulation included in the compromise, was
the recognition that we needed to preserve the ability of businesses to
legitimately hedge risk without additional costs, and it did this for all
businesses, whether they are manufacturers, processors, or even financial in
nature.” Chambliss and other Republicans warned that in the
Chambliss warned that smaller institutions “who are hedging their risk and also engaged in developing products for their customers should not inadvertently be captured in a new regulatory category designed to apply to big financial dealers.” He warned against imposing “overreaching regulations on the businesses and financial entities that had nothing to do with the meltdown of our financial system.”
Chambliss concluded that while there is 90% agreement on derivatives legisatioin, “the remaining 10 percent of the issues involved here – namely the extent of the end-user exemption; and whether there is a mandatory trading requirement on exchange for swaps instead of the more functional price reporting – are very important because they involve real costs for businesses, and real implications for properly functioning derivatives markets.”
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