Lincoln Irritated Over Efforts to Soften Derivatives Provisions
Senate Agriculture Chairman Blanche Lincoln expressed strong frustration Wednesday following a closed-door meeting with House and Senate leaders to discuss the financial regulatory reform bill, during which Members warned that language she authored imposing new regulations on the derivatives market has limited support in the House.
“There are some that are not as interested in being as aggressive in making sure that the possibilities of this financial crisis don’t happen again,” the Arkansas Democrat said after the meeting.
“Our objective has always been to make sure we create more stable markets for businesses and investors,” she added. “I think we have a good plan to do that, but there’s going to be those that push back.”
Lincoln met with Senate Majority Leader Harry Reid (D-Nev.), Senate Banking Chairman Chris Dodd (D-Conn.), Speaker Nancy Pelosi (D-Calif.) and House Financial Services Chairman Barney Frank (D-Mass.). At that meeting, Frank warned Lincoln that support in the House was limited for her derivatives language.
The House New Democratic Coalition sent a letter to Dodd, Frank and their Republican counterparts last week expressing opposition to Lincoln’s provision requiring commercial banks to spin off their swaps trading desks. The letter signed by 47 House Members charged the provision would “impair the ability of these entities to manage risk and issue bonds, and therefore should be eliminated.”
House and Senate conferees are expected to vote on the derivatives section of the sweeping financial reform legislation Thursday. Aides predicted that House Members were going to send Lincoln a derivatives proposal Wednesday for her to consider. The language is considered some of the most controversial in the legislation, and its wording could affect how some Members ultimately vote on the financial reform conference report.
Sen. Chuck Grassley (R-Iowa), who voted in favor of Lincoln’s proposal in the Agriculture Committee and supported the Senate’s financial reform package on the floor last month, cautioned against “watering down” the derivatives measure.
“I voted for it in the Ag committee, and it’s one of the main reasons I voted for it on the floor of the Senate,” he said.