Sen. Elizabeth Warren (D-Mass.) May 16 announced her strong opposition to a raft of derivative bills approved by the House Financial Services Committee May 8.
The bills included H.R. 742, a bill that would remove the requirement that foreign regulators indemnify swap data repositories when accessing their data; H.R. 992, which would expand the types of derivatives products that financial entities could trade without losing access to federal depository assistance; and H.R. 677, which would exempt swaps transacted among affiliates of the same company from margin, clearing, and reporting requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act (45 SRLR 906, 5/13/13).
In a statement, Warren said she agreed with the concerns voiced by Treasury Secretary Jacob Lew about the bills. “It is dangerous for Congress to amend the derivatives provisions of the Dodd-Frank Act without at the same time taking accompanying steps to strengthen reform and maintain the law's equilibrium,” Warren said.
Five years have passed since the 2008 financial crisis, but middle-class Americans continue to pay the “heavy price” for the lack of regulatory oversight that allowed the turmoil to occur, Warren continued. “Now is no time to go backwards,” she said. “I will do what I can in the United States Senate to stand up to those who would chip away at reform by rolling back or fighting the implementation of the Dodd-Frank Act.”
Lew, in a May 6 letter expressing the Obama administration's position, urged the House Financial Services Committee on the eve of its vote not to weaken Dodd-Frank's derivatives measures. The regulators charged with implementing its provisions--the Securities and Exchange Commission and the Commodity Futures Trading Commission--already are addressing many of the issues presented in the bills through their rulemaking, Lew stressed.
“In many instances, legislation is premature and aspects would be disruptive and harmful to the implementation of key reforms,” he said. “We should allow the regulators to complete their ongoing rulemakings, and then determine what changes, if any, might be necessary in certain areas to improve the effectiveness of these reforms.”
Lew's letter is available at /uploadedFiles/Content/News/Legal_and_Business/Bloomberg_Law/Legal_Reports/Lew-Letter(2).pdf.
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