Treasury’s Geithner pushes for strong swaps reform

* Geithner repeats administration position on reforms

* Does not mention Agriculture Committee swaps desk idea

WASHINGTON, April 16 (BestGrowthStock) – Despite resistance by
financial lobbyists, the U.S. Senate must adopt strong reforms
for the derivatives market, Treasury Secretary Timothy Geithner
said in a letter to leaders of the Banking and Agriculture
committees.

Geithner reiterated four key components the Obama
administration wants to see in a financial reform bill that
will be considered by the Senate as early as this month, but he
did not mention Agriculture chairman Blanche Lincoln’s idea of
forcing banks to spin off their swaps desks.

If adopted, divestiture of swaps desks could have an
immediate effect on bank earnings. Five large banks account for
almost all of the estimated $213 trillion in derivatives
contracts held by the banking industry (Read more about the banking industry recovery.), says a federal agency.

Geithner said effective regulation of derivatives must
include:

– Requiring all standardized contracts to trade on
regulated platforms and to go through clearinghouses.

– Putting swaps dealers and major market participants under
federal supervision and setting capital, margin record-keeping,
reporting and business conduct rules for them.

– Requiring the reporting of all trading, whether standard
or customized swaps.

– Giving regulators the power to limit market share by an
investor and the power to act against fraud, manipulation and
abuse.

Investment

(Reporting by Charles Abbott; Editing by Lisa Shumaker)

Treasury’s Geithner pushes for strong swaps reform