If you stayed up until 5:30 this morning with the conferees on financial reform on C-SPAN, you deserve a medal. For those who didn't stay up, here's a thumbnail sketch of what passed last night, and will likely become law next week:
Members of the House-Senate committee approved proposals to restrict trading by banks for their own benefit and requiring banks and their parent companies to segregate much of their derivatives activities into a separately capitalized subsidiary....
At two minutes before midnight Thursday, some 14 1/2 hours after they began work Thursday morning, members of the House-Senate conference committee approved a final revision of the measure known popularly as the Volcker Rule.
The rule, named for Paul A. Volcker, the former Federal Reserve chairman who proposed the measure this year, restricts the ability of banks whose deposits are federally insured from trading for their own benefit. That measure had been fiercely opposed by banks and large Wall Street firms, who viewed it as a major incursion on some of their most profitable activities....
Banks managed to wrangle limited exceptions to the rule that would allow them to continue some investing and trading activity. The agreement limits banks’ investments in hedge funds or private equity funds to no more than 3 percent of a fund’s capital; those investments could also total no more than 3 percent of a bank’s tangible equity....
After seven hours of additional debate, the conferees approved revisions to the derivatives legislation that would require banks and their parent companies to segregate much of the derivatives trading businesses.
The final restrictions were not as tight, however, as originally approved by Senator Blanche Lincoln, the Arkansas Democrat who is chairwoman of the Senate Agriculture Committee, which oversees the Commodity Futures Trading Commission, the chief regulator of derivatives.
More on this as the actual details of the legislation emerge. But the bottom line, Scott Brown got his carve out and is apparently the new Olympia Snowe. For all of Blanche Lincoln's bluster, the New Dems in the House are tougher, and got their way.
