The Pressure Of Primaries: Dodd Doesn't Weaken Derivatives Language In Already Semi-Weak Fin Reform Bill
A far-reaching proposal to regulate derivative trading will not be scaled back in Wall Street reform legislation, at least for now, multiple Senate aides confirm. The development comes as welcome news to an unusual mix of progressives, financial officials, and at least one conservative Democrat: Sen. Blanche Lincoln (D-AR).
Lincoln is the author of the derivatives title in the Senate's financial regulation bill, and for weeks has faced opposition from Wall Street, the White House, and members of her own party over a provision to force financial firms to spin off their derivatives trading desks into stand-alone entities.
The proposal to weaken the derivatives title was ultimately drafted by Senate Banking Committee Chairman Chris Dodd--the Democrats' chief financial reform negotiator--and introduced yesterday at the eleventh hour of the debate over Wall Street reform. In it, Dodd proposed kicking the spin-off provision down the road for two years pending review by federal regulators, many of whom are already unfavorably disposed to it.
As the Seattle Mc said:
But.....
But just because it's gone, it may not be forgotten. Though Dodd's decision to drop it likely means financial regulatory reform will pass the Senate leaving Lincoln's plan untouched, Democratic leaders will get one more bite at the apple when the House and Senate meet to iron out the differences between their two bills. The House's derivatives title is significantly weaker than the Senate's and, with the White House's backing, party principals could meet in the middle, scrapping or punting on the spin-off provision as part of a convenient compromise.Oh dear is me and looking at the lack of common sense at not doing the right thing.
But that would still buy Lincoln time (her runoff is on June 8) and would force top Democrats to explain why they scrapped the tough-on-Wall-Street plan behind closed doors.
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