It is amazing what a primary challenge can do. Senator Lincoln's agriculture committee is suppose to work on the derivatives section of the Wall Street bill. There has been much speculation that she would cow tow to the banks and push the derivatives portion more in the shadows then even the Dodd's bill.
Well apparently Senator Lincoln is doing the opposite and is moving the derivatives portion of the bill more to the LEFT. She will announce her portion on Thursday.
http://www.politico.com/...
(This article comes after Huffingtonpost's article. Perhaps Huffingtonpost jumped the gun on what Senator Lincoln was actually proposing. Her proposal is TOUGHER then what Obama/Geithner are proposing on derivatives).
Senator Lincoln will be unveiling her portion of the Wall Street bill on Thursday which she has jurisdiction over which is the derivatives portion since she is head of the agriculture committee.
Well the shock is that she has decided to move this bill to the Left.
A new proposal by Senate Agriculture Committee Chairwoman Blanche Lincoln would require sweeping changes to the $450 trillion derivatives market, including forcing big banks to spin off "swaps desks" that handle the complex financial instruments — a more aggressive approach than either the White House or other congressional committees have advocated so far, according to the Arkansas Democrat and her aides.
The banks ain't going to like this:
Lincoln’s plan is certain to evoke widespread opposition from Wall Street and the banking industry. For instance, her provision to move swaps desks out of banks — what her aides have dubbed the "too big to fail" language — could cost major banks billions of dollars of revenues reaped annually from such transactions.
Looks like Senator Lincoln is going populist:
Her bill focuses on tighter regulation of the markets for derivatives — which were at the heart of the 2008 global meltdown but have been largely unregulated up until now.
Lincoln argues that such a move is necessary to avoid future bailouts of the industry.
"It will include strong mandatory trading and clearing requirements as well as real-time price reporting that will bring 100 percent transparency and accountability to Wall Street. My bill will vigorously reform unregulated markets, close all loopholes, and protect jobs on Main Street,"
She is focusing on four main areas:
- first, Lincoln will propose regulating foreign currency swaps, an action even the Treasury Department has opposed;
— second, Lincoln would bar any "major swaps dealers," including big banks, from receiving federal financial assistance in the event of a market meltdown;
— third, the Arkansas Democrat would require dealers to consider their "fiduciary duty" to all governmental agencies, pension plans, endowments or retirement funds during any transaction;
— and fourth, swaps dealers or other traders in the complex financial instruments would be open to fraud actions brought by federal government, if they engage in a transaction with another party knowing the deal could be used to defraud other investors or the public.
In other words, a mandatory exchange trading.
But of course there is a loophole for nonbank entities:
Under Lincoln’s proposal, manufacturers, agriculture companies and commodities producers would not be covered by this clearing requirement.
However, I will give Senator Lincoln some credit in going FURTHER than both the Dodd bill and the House bill on derivatives. Apparently since Senator Chambliss who is her Republican counterpart on the Agriculture committee refused to back "mandatory exchange trading", Lincoln reached out to Senator Cantrell in writing the derivatives language.
Let's see if we can have this stronger language in the bill.