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Amendment Offered To Financial Regulatory Reform Bill

An amendment to the financial regulatory reform bill would prohibit federal assistance to swap entities. The authors of the amendment, Senators Judd Gregg, R-N.H., Saxby Chambliss, R-Ga., and Bob Corker, R-Tenn., say the amendment will remove harmful language that could prohibit banks from engaging in derivatives transactions.

"Non-partisan experts, including FDIC Chairman Sheila Bair, Comptroller of the Currency John Dugan, and staff at the Federal Reserve have warned of the devastating effects this provision would have on our economy," Gregg said. "The current provision is unnecessarily punitive and will not help bring transparency and accountability to the derivatives marketplace." 

Chambliss says this proposal simply strikes a provision that creates obstacles for those who use swaps to manage their business risks and as such need access to well capitalized counterparties. Corker says a strong derivatives title is needed that causes more trades to be cleared and increases transparency.