Posted on 06/10/2010 1:25:38 PM PDT by Andrea19
As the House and Senate bills (HR 4173 and S 3217) for financial reform must be reconciled in conference committee, it now seems clear that the major sticking point of derivatives may pose more of a threat to economic prosperity than had previously been suspected.
Going into the committee, both bills agree that the vast majority of swap derivative contracts should be traded and cleared on public exchanges as opposed to through private over-the-counter negotiations between large firms. The House bill would offer exemptions to a wide variety of end-user corporations like agribusiness, airlines, industrial manufacturers, auto dealers, and other companies that benefit from the risk hedging that the contracts can offer, whereas the Senate version limits the pool of those who can avoid the onerous regulation to a much smaller group. Likewise, both bills would subject this new exchange to more regulatory oversight, and the House specifies the SEC and the CFTC as the organizations to exercise that authority, which already adds an unnecessary and burdensome compliance cost; given the type of investors who deploy these complex strategies, oversight could add no additional expertise or scrutiny.
But, the crucial difference between the two bills stems from an amendment offered by...
Read more: http://www.atr.org/conference-committee-reconsiders-disastrous-derivatives-proposal-a5065#ixzz0qU3H7IO1
(Excerpt) Read more at atr.org ...
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