No swap end-user margins in bank bill-Frank aide

By Kevin Drawbaugh

WASHINGTON, June 30 (BestGrowthStock) – The Wall Street reform bill
would not impose margin and capital requirements on swap
end-users, a spokesman for Representative Barney Frank said on
Wednesday, downplaying concerns raised by a senior Republican.

Republican Senator Saxby Chambliss on Tuesday said that a
mistake in the sweeping bill — which was moving to a final
vote soon in the House of Representatives and by mid-July in
the Senate — could burden commercial end-users of
over-the-counter derivatives, such as swaps.

Chambliss offered an amendment to the bill that was aimed
at ensuring end-users, ranging from airlines to agribusinesses,
would not face indirect costs of a new margin requirement.

The amendment was rejected by senators on a joint
Senate-House conference committee that finalized the bill.

On Wednesday, spokesman Steven Adamske said Republicans and
banks fear “we are going to impose margin and capital
requirements on end users. That is not the case in the bill. We
do that for major swap participants and swap dealers. If you
are not either of those two things, you are considered exempt
from these rules.

“No commercial end user will be considered those two things
… The bill is crystal clear,” he said.

Swaps and OTC derivatives are contracts that allow users to
hedge against the risks of movements in interest rates, energy
prices, currency exchange and other business factors.

The bill would impose regulation for the first time on the
$615 trillion OTC derivatives market, rerouting much of the
market through more accountable channels, such as exchanges,
electronic trading platforms and central clearinghouses.

Banks would also have to spin off the riskiest of their
swap-clearing desk operations, but could keep many swaps
in-house, including derivatives to hedge their own risks, under
rules drafted by Democratic Senator Blanche Lincoln.

The OTC derivatives market — especially credit default
swaps like those that dragged down former insurance giant AIG
(AIG.N: ) — were widely blamed for aggravating the 2007-2009
financial crisis. The reform bill aims to prevent a repeat of
that crisis, which dragged the economy into a deep recession.

Money

(Editing by Kenneth Barry)

No swap end-user margins in bank bill-Frank aide