Cantwell to back finance reforms
Senator satisfied bill controls derivatives
WASHINGTON – After meeting with Treasury Secretary Timothy Geithner, Sen. Maria Cantwell, D-Wash., said Thursday that she’ll support a finance regulation bill that was facing a troubled future as Congress adjourned for the Fourth of July break.
Cantwell’s vote was crucial to Democratic leadership as it struggled to find the 60 votes it needs to break a filibuster and bring the bill to the Senate floor after the recess. The House approved the bill Wednesday.
Cantwell has been especially concerned about language in the bill regulating the $600 trillion derivatives markets and whether federal regulators would use their new authority to crack down on a market the senator has long considered out of control and one of the prime causes of the recession.
“I am satisfied this elusive market will now be regulated,” Cantwell said.
Cantwell met with Geithner and then received a letter from him in which he said he agreed with the senator’s interpretation of the complicated derivatives language in the bill and pledged the Commodities Futures Trading Commission would aggressively enforce the new regulations.
“I wanted a commitment that he saw the language the same way I did,” Cantwell said.
Cantwell was one of two Democrats who voted against an earlier Senate version of the bill because she didn’t feel it went far enough in regulating the derivatives market.
Derivatives are essentially side bets on how prices for such things as commodities and petroleum futures or home mortgages will go up or down. Farmers and airlines among others have used derivatives as a hedge to make sure they wouldn’t be hurt by swings in the markets. But investment banks over the past several years have moved into the derivatives markets in a major way.
Cantwell’s staff had spent nearly a week going over the language in a compromise bill and finally concluded the bill would “put some teeth” into regulating derivatives, including giving federal regulators oversight of foreign derivative exchanges and limiting how much money a single financial institution can invest in a particular derivative.
“Those doing derivative trading in the dark will now have to do it in the bright light of day,” she said.
With the death of West Virginia Sen. Robert Byrd, Democrats have been scrambling for the votes they need to clear the bill for passage.