WASHINGTON – Last spring, Walt Minnick was offered a chance few freshman congressmen get, to help shape what could be landmark legislation overhauling the nation’s financial regulations.
The Idaho Democrat was one of five members of the House Finance Committee tapped by Chairman Barney Frank, D-Mass., to work out the details on regulating over-the-counter derivatives, a complicated yet unregulated form of investment that was a key part of the nation’s financial problems. Minnick had experience dealing with the complex financial instruments as chief executive officer of Trus Joist lumber company and is working on an overlapping bill to regulate commodity futures contracts.
“I’m appreciative of the opportunity to have been asked to deal with derivatives and corporate governance, and to play a role where my input has some impact,” Minnick said.
Over the last few months, he worked closely with Frank to craft new rules to track derivative sales.
On Wednesday, he sponsored a successful amendment exempting farmers or other businesses from much of the regulations when they buy derivatives to protect themselves from price shifts. Minnick regularly used that strategy to protect his former company from shifts in the value of Canadian currency. Exempting non-financial companies from the heavy regulatory burden allows them to focus on what they know, he said, and scrutinizes the businesses whose business is derivatives.
While the current proposal has more regulatory overlap between the Commodity Futures Trading Commission and the Securities and Exchange Commission than he likes, Minnick is pleased with the overall bill that moved to the floor Thursday. It would force standard derivatives onto monitored markets and require all trades to be reported, big steps toward the goal of updating the country’s regulatory structure, he said.
“The most important part of the bill is creating a vehicle to keep track of systemic risk and giving authority to the appropriate regulator to nip it in the bud,” he said.