GOP's Grassley joins Dems in passing limits on derivatives

Source: McClatchy

GOP's Grassley joins Dems in passing limits on derivatives

By David Lightman and Kevin G. Hall | McClatchy Newspapers

WASHINGTON — The Senate Agriculture Committee on Wednesday approved by 13-8 tough new curbs on financial derivatives, including a ban on most direct bank trading of the tools, which played a big role in exacerbating the 2008 financial crisis.

Derivatives are financial bets between private parties. Their value is derived from movements of an underlying asset. Some derivatives, such as oil futures contracts, already are regulated and trade on an exchange. Congress is trying to address the over-the-counter products that are often called swaps because one party wants to swap a risk it's assumed to another party that’s willing to shoulder that risk for a fixed price. Swap deals cover everything from movements in the prices of contracts for delivery of barrels of oil or bushels of wheat to changes in the value of the dollar versus other currencies. These swaps currently take place off regulated exchanges.

The ban would require banks to spin off divisions that trade in the lucrative but opaque financial instruments into free-standing subsidiaries.

The vote sent a strong signal that not only are Democrats eager to take bold steps to revamp the regulatory process, but also that Congress may enact a broad overhaul of Wall Street practices.




Read more: http://www.mcclatchydc.com/2010/04/21/92611/gops-grassley-joins-dems-in-passing.html

Would this not be banking or something like that?

money from the banks.

Is it ordinary for the Senate Agriculture Committee to weigh in on bills to regulate banking?

derivatives are used commodity trading

the bill. No way the republicans will allow this bill to pass.

before he was against it.

crops in order to insure that they can cover their contracts. It's sort of an insurance for their crops.

those Wall Street assholes... :thumbsup:

because, God knows, they are derivatives