U.S. Senators Judd Gregg (R-NH), Saxby Chambliss (R-GA), and Bob Corker (R-TN), today filed an amendment to the financial regulatory reform bill currently under consideration in the U.S. Senate to strike Section 716, a provision prohibiting federal assistance to swap entities. The amendment will remove harmful language that could prohibit banks from engaging in derivatives transactions.
Senator Gregg stated, "The derivatives market in this country is a critical source of liquidity and credit that helps make the economic engine of this country run. Unfortunately, the provision included in Chairman Dodd's bill will do fundamental harm to our nation's derivatives market, pushing jobs and capital overseas. Non-partisan experts, including FDIC Chairman Sheila Bair, Comptroller of the Currency John Dugan, and staff at the Federal Reserve have warned of the devastating effects that this provision would have on our economy. The current provision is unnecessarily punitive and will not help bring transparency and accountability to the derivatives marketplace. In fact, it could have the opposite effect. For this reason, Senators Chambliss, Corker and I are offering an amendment to strike the provision in full. I hope my colleagues on both sides of the aisle will join us in supporting this amendment so that we can keep America as the preeminent destination for global capital, allow Main Street businesses and families to continue obtaining credit, and encourage our entrepreneurs to create jobs here at home."
"Our amendment simply strikes a provision that creates obstacles for those who use swaps to manage their business risks and as such need access to well capitalized counterparties." said Senator Chambliss, Ranking Member of the Senate Agriculture Committee. "This is just another example of how many provisions in the underlying bill over reach and cause unintended hardships on businesses that had nothing to do with the collapse of the financial markets. Sens. Gregg, Corker and I urge our Senate colleagues to support this amendment aimed to protect Main Street."
"We need a strong derivatives title that causes more trades to be cleared and increases transparency. Instead, the current bill would remove swap desks from commercial banks, lowering the amount of capital available for actual lending. That is exactly the wrong thing to be doing in this tough economy, and I'm proud to support Senator Gregg's effort to strike this damaging language from the Dodd bill," Senator Corker said.