Dodd Offers Last-Minute Derivatives Compromise

More

As anticipated, Senate Banking Committee Chairman Chris Dodd (D-CT) offered a compromise for the derivatives section of the financial reform bill on Tuesday. He did so almost literally at the last-minute -- offered just three minutes before the noon deadline for new amendments. This should result in the few Republican votes the bill needs to pass tomorrow.

The Washington Post reports on how the amendment will affect the controversial provision that would have forced banks to spin-off their derivatives desks, or place them in a separate affiliate:

Under the compromise, the Senate would keep the sweeping provision, but delay its implementation for two years while it's studied and quite likely kill it at the end.

Dodd's plan calls for submitting the derivatives rules, which were initially proposed by Sen. Blanche Lincoln (D-Ark.), for study by a federal council of regulators. Several key members of the council and Treasury Secretary Timothy F. Geithner, who could have final say under the compromise, have serious reservations about forcing banks to get out of the derivatives business altogether.

So he didn't kill the provision, just sent it to its death. As noted here, virtually every significant Washington policymaker is against the proposal. They will likely be the ones sitting on that council. According to the Post, Geithner, in particular, would decide if the provision will survive. Considering that the Obama administration is against the rule, it's as good as dead.

Of course, this is a politically savvy move. Democrats can now blame the council for the death of the proposal. Sen. Blanche Lincoln (D-AR) can continue to say that she advocated for it and made it a part of the bill. It was theorized that Dodd might wait until after her Tuesday primary to offer this amendment, and he did wait precisely as long as possible. It should have little effect on voter's decisions, given the timing. And even if a run-off is required for her seat, she can still claim she took a strong stance against Wall Street.

This last-minute move by Dodd should help guarantee a few Republican votes from Senators who were very concerned about this piece of the legislation. Notwithstanding any highly controversial amendments passing before the big vote tomorrow, the bill should easily pass.

Jump to comments
Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.
Get Today's Top Stories in Your Inbox (preview)

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity


Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity

Video

Is Technology Making Us Better Storytellers?

The minds behind House of Cards and The Moth weigh in.

Video

A Short Film That Skewers Hollywood

A studio executive concocts an animated blockbuster. Who cares about the story?

Video

In Online Dating, Everyone's a Little Bit Racist

The co-founder of OKCupid shares findings from his analysis of millions of users' data.

Video

What Is a Sandwich?

We're overthinking sandwiches, so you don't have to.

Video

Let's Talk About Not Smoking

Why does smoking maintain its allure? James Hamblin seeks the wisdom of a cool person.

Writers

Up
Down

More in Business

Just In