04.21.10

With Leahy’s Support, Senate Ag Committee Votes Out Bipartisan Reforms On Risky Derivative Deals

...Bill Brings ‘Sunshine’ To Wall Street’s $600 Trillion Derivatives Market

WASHINGTON – The U.S. Senate Committee on Agriculture, Nutrition and Forestry, in a much-anticipated vote, Wednesday approved The Wall Street Transparency and Accountability Act, bringing the strongest Wall Street reforms to date a big step closer to reality.  Senator Patrick Leahy (D-Vt.), the panel’s most senior member, supports the bill – offered by Senator Blanche Lincoln (D-Ark.), who chairs the committee -- which is expected to be merged with the financial reform bill sponsored by Senator Christopher Dodd (D-Conn.), headed for votes on the Senate Floor.

Leahy noted that committee’s bipartisan bill is intended to bring full transparency to financial markets, prevent future bailouts and keep jobs on Main Street.  “I applaud Chairman Lincoln for crafting a bill that goes directly at the heart of the Wall Street excesses that put our economy at risk,” Leahy said in a statement.  “This is a big dose of sunshine for a system that has relied on risky, hidden dealings.  The bill takes a major step toward bringing real reform to our financial markets and providing the transparency and accountability that the American people deserve.  The bill we passed out of committee today will finally bring the $600 trillion derivatives market out of the dark and into the light of day, ending the days of backroom deals that put our economy at risk.”

The bipartisan Agriculture Committee reform bill prohibits the Federal Reserve and FDIC from providing any federal funds to bail out Wall Street firms that engage in risky derivative deals. Banks engaging in risky swaps transactions will be forced to spin off their swap dealer desks or be barred from receiving any federal remedies, making this the strongest Wall Street reform bill to date.  This bill also closes all loopholes and ensures regulators have the authority to go after those who try to evade the law.

Wall Street traders today artificially drive up prices of heating oil, gasoline, diesel, and other commodities through unchecked speculation not associated with regular supply and demand fundamentals, in order to reap billions of dollars in financial rewards.  These transactions hit consumers with extreme price volatility and higher prices for these commodities as well as goods and services in associated industries. The strong reforms in the committee’s bill are aimed at letting supply and demand determine what consumers pay, instead of speculators in an unregulated Wall Street environment.

The Wall Street Transparency and Accountability Act also includes mandatory clearing and trading requirements and real-time reporting of derivatives trades, to make the entire financial system safer for consumers and Main Street. The narrow end-user exemption in the bill will allow commercial interests, such as electric cooperatives and heating oil dealers, to be able to hedge business risks.

[Full legislative text is available http://ag.senate.gov/site/legislation.html]

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