Leading Dems For Dodd-Frank Reform Before They Were Against It

John Boehner

The Wall Street Reform and Consumer Protection Act requires, for the first time, the regulation of over-the-counter derivatives, previously opaque transactions that helped bring our financial system to the brink of disaster. The vast majority of derivatives must now be centrally cleared and publicly reported, and be backed by margin and capital to ensure that swap dealers and major swap users can honor their commitments. In addition, the reform law also prohibits banks from placing bets with federally insured deposits through the `Volcker Rule’. Both measures serve as important safeguards as we rebuild trust in our financial system.

As amended, H.R. 1838 would repeal portions of Section 716 of the financial reform law, also known as the `push-out provision.’ Section 716 prohibits banks from engaging in several types of derivatives. Questions have been raised about this provision by economists and regulators including FDIC’s Sheila Bair, who are concerned that it might interfere with a bank’s ability to use derivatives to diminish risk. Section 716 was not part of the original House-passed version of the financial reform law.

During the Full Committee markup, Democrats worked with the Majority to amend H.R. 1838 to continue the prohibition of complex swaps employed by AIG with devastating effect. H.R. 1838, as amended, addresses the valid criticisms of Section 716 without weakening the financial reform law’s important derivative safeguards or prohibitions on bank proprietary trading. 

Barney Frank

Wm. Lacy Clay

Gwen Moore

James A. Himes 

Ruben Hinojosa 

Andre Carson

Gary L. Ackerman 

Al Green

Stephen F. Lynch 

David Scott

Maxine Waters 

Carolyn B. Maloney

Melvin L. Watt

Luis V. Gutierrez

Gary C. Peters

Ed Perlmutter

Michael E. Capuano

Gregory W. Meeks

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