On the floor of the U.S. Senate Wednesday Ag Committee Chairman Blanche Lincoln, D-Ark., addressed the derivatives title of the Financial Stability Act. The derivatives title passed the Agriculture committee two weeks ago. Lincoln said that under the current system, there are a handful of big banks that are simply no longer acting like banks. This provision seeks to ensure that banks get back to the business of banking.
"In my view, banks were never intended to perform these activities, which have been the single largest factor to these institutions growing so large that taxpayers had no choice but to bail them out in order to prevent total economic ruin," Lincoln said. Lincoln's provision seeks to accomplish two goals: getting banks back to performing the duties they were meant to perform; and separating out the activities that put these institutions in peril. Lincoln responded to criticism of the title, saying the suggestion that this provision will force derivatives into the dark without oversight, is absolutely false. She said that the Dodd-Lincoln bill makes it abundantly clear that all swaps activity will be vigorously regulated by the Fed, the Commodity Futures Trading Commission and the Securities Exchange Commission.
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