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Source: CNBC
Banks yesterday won an important victory over the part of the financial reform package they most feared—and almost no one noticed.
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Lincoln’s spokesperson says the derivatives proposal remains “a strong provision,” which might make you think it remains a strong provision.
Think again.
Under the proposed compromise, any spin-out of swaps desks will be phased in over a two-year period. During that time, federal banking agencies will be tasked with considering the impact of the measure on mortgage lending, small business lending, jobs, and capital formation.
Those vague and open-ended considerations will provide wiggle-room for the federal banking agencies to avoid implementing the new swaps rules.
Make no mistake about what is going on here. The swaps provision is being transformed from a mandatory ban into something over which banking regulators have discretion. And the banking regulators—from Fed chair Ben Bernanke, to FDIC chief Shelia Bair, to SEC head Mary Schapiro—oppose the ban on swaps altogether. Given wiggle room, they will wiggle right past Senator Lincoln rule.
No link yet.
The whole thing was just political gamemanship:
The conference to reconcile differences between the bills passed by the House and Senate probably won’t even get around to considering the swaps provision until next week. What’s the rush to compromise?
Keep in mind the Lincoln became a harsh critic of derivatives trading in the face of a primary challenge from the left. Her victory in the primary took away the pressure to fight for an effective derivatives ban. All she needs now is the appearance of a “strong provision.”
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Now that lefties have no one to vote for except her, she can go back and promote her usual pro-corporate beliefs.
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