Lincoln Tacks Left on Derivatives

I’ve been highlighting the concern in many quarters that Senator Blanche Lincoln (D-AR) would use her position as Chairwoman of the Agriculture Committee to substantially water down Chris Dodd’s derivatives regulation language. But late yesterday, John Bresnahan and Carrie Budoff Brown delivered the story for Politico that Lincoln, perhaps feeling the heat from a primary challenge from Bill Halter, has cut off negotiations with Saxby Chambliss (R-GA) is putting together reasonable tough language:

“It will include strong mandatory trading and clearing requirements as well as real-time price reporting that will bring 100 percent transparency and accountability to Wall Street. My bill will vigorously reform unregulated markets, close all loopholes, and protect jobs on Main Street,” Lincoln said in a statement to POLITICO. […]

Lincoln’s position is similar to the provision approved by the House Financial Services Committee, according to her aides, although with fewer exemptions on which “commercial end users” sell be exempted from “clearing” their swaps, and is “at least as stringent” as that called for by the Senate Banking Committee. Under Lincoln’s proposal, manufacturers, agriculture companies and commodities producers would not be covered by this clearing requirement.

I don’t think this actually does “close all loopholes” but it certainly seems to have fewer loophouse than the House language (which I think everyone agrees is inadequate) and “at least as stringent” as the Dodd language is the right goal to be aiming for. Obviously real evaluation of this will have to wait until folks can see the actual text, but this process seems to be on the right track.