The Dems side with the Banksters......Again.

[marmar]

from HuffPost:



The long-awaited showdown between banks and Sen. Blanche Lincoln over her derivatives reform section of the Wall Street bill begins Thursday. The conference committee will consider an offer made by the House to amend Senate legislation that forces banks to spin off their swaps desk and separately capitalize that operation, while also bringing the business out into the open, requiring derivatives to be cleared and traded on exchanges.

However, one analyst identified an end-run the House may be attempting. Section 754 of the offer advanced by House Financial Services chairman Barney Frank (D-Mass.) says that "the Bank Holding Company Act of 1956 is amended by striking 'commodities activities' each place it appears and inserting 'commodities and swap activities,' which would make the swaps desks a 'functionally regulated subsidiary.'"

That would mean that a bank getting taxpayer assistance through the Federal Reserve window would still be required to spin off its swaps desk, but it could maintain it within a separate section of the bank holding company that isn't getting government assistance. "This is not as strong as a complete spinoff, but it still will have positive implications for the derivatives markets in the medium to long term," Adam White, director of research at White Knight Research & Trading, told HuffPost. White is a backer of Lincoln's original language.

The improvement would come because the big banks currently have a major competitive advantage in the swaps business: Everyone knows that they're "too big to fail," so that if they don't have the capital to pay off a losing bet, the government will step in and their counterparties will be paid. The smart move, then, is to trade with such banks. If the swaps desk were no longer part of the bank itself, but rather part of the bank holding company, the chance of a bailout is diminished, White said. ................(more)

The complete piece is at: http://www.huffingtonpost.com/2010/06/23/final-derivatives-showdown_n_623573.html

[katandmoon]

1. But of course! They know who writes the checks!

[inna]

2. wait, i don't get it - Lincoln is trying to do something good for once?

What happened with the Volcker rule btw?