Wall Street's Win on Swaps Rule Shows Washington Resurgence - Bloomberg - 0 views
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Wall Street is re-emerging as a force in Washington as it closes in on one of its biggest wins against regulation since the financial crisis. With must-pass spending legislation making its way through Congress this week, banks seized on an opportunity to attach a measure that would halt a planned restriction on derivatives trading they had long opposed. The industry’s lobbying extended to the highest levels of finance with JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon pressing lawmakers to support the change.
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Wall Street’s success, after four years of struggling to persuade Congress to ease the Dodd-Frank Act, is a precursor to more fights next year against some of the law’s hallmarks: the consumer protection bureau and stiff oversight of big financial companies whose failure could threaten the financial system. “The Wall Street interests -- the big banks -- they’re back,” said Richard Durbin of Illinois, the Senate’s second-ranking Democrat. The $1.1 trillion spending measure cleared its biggest hurdle when the House passed it last night and sent it to the Senate for consideration today. Banks had modest expectations even under the new Republican Congress that will convene in January, a group they presume will be more receptive to their agenda. Their surprising success this week may embolden lenders to seek deeper regulatory changes as Republicans take control of the Senate from Democrats.
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The derivatives provision would let JPMorgan, Citigroup Inc. (C), Bank of America Corp. and other banks trade almost all swaps in divisions that have government backstops like deposit insurance. It would repeal a requirement that some of the trades be pushed out to separate units, which Wall Street argued would drive up costs for clients and increase risk in the financial system by moving the trades to firms less regulated than banks. Lawmakers put the requirement in Dodd-Frank, which was passed in 2010 after banks’ losses on souring derivative trades spurred a taxpayer bailout of Wall Street in 2008. The inclusion of the Dodd-Frank changes in the spending bill spurred a week-long opposition campaign by Senator Elizabeth Warren of Massachusetts, House Minority Leader Nancy Pelosi and other Democratic lawmakers. Their news conferences, TV interviews, emergency meetings on Capitol Hill and pressure from allies including the AFL-CIO labor federation prompted President Barack Obama to call lawmakers urging them to vote for the broader bill to avoid a government shutdown.