393
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Changes
SW: →Bank Reform Bill Derivatives Amendment: - add section
As the Senate began the debating the financial reform bill in May, Senator Lincoln decided to take an tough stance against banks regarding derivatives trading.<ref>Edward Wyatt, [http://www.nytimes.com/2010/05/16/us/politics/16derivatives.html "Blanche Lincoln Finds Few Allies on Derivatives Ban,"],"New York Times," May 15, 2010.</ref> Lincoln's amendment calls a separation between banks business serving the general public and their activities in credit derivative swaps. The amendment, which was voted on by the Senate and rolled into the larger Senate financial reform bill, "will force the biggest banks to spin off their swaps (or derivatives) desks into a separate entity. That entity will be regulated and can remain part of the bank holding company, but it no longer has access to the Federal Reserve's flow of funds, FDIC insurance and the taxpayer guarantee. Supporters include legendary economists and public policy experts such as Robert Reich, Joseph Stiglitz, Nouriel Roubini, and Michael Greenberger." <ref>Mary Bottari, [http://www.banksterusa.org/content/midnight-massacre-pending-lets-whip-our-senators "Midnight Massacre Pending, Let's Whip Our Senators,"], "BanksterUSA," May 13, 2010.</ref> The derivatives measure in the bill will target the five largest banks that account for 90% of the these derivative measures. <ref>Id.</ref> " Lincoln's amendment will go right after the deals that Goldman Sachs is now being officially investigated for and Lincoln's language is #1 on their hit list." <ref>Id.</ref>
"The swaps business, which accounts for billions in bank profits, is so desirable that the banks have all but given up fighting other restraints on their derivatives business." <ref>Edward Wyatt, [http://www.nytimes.com/2010/05/16/us/politics/16derivatives.html "Blanche Lincoln Finds Few Allies on Derivatives Ban,"], "New York Times," May 15, 2010. </ref> Lincoln's provision in the financial reform bill faces opposition from some big name officials. The chairman of the Federal Reserve, Secretary of Treasury, and Paul Volcker all oppose the derivative measure, arguing that it goes too far. <ref>Id.</ref> However, many of Lincoln's supporters argue that the derivative measure in the bill correctly affirms bank's separate role in serving the public. If a bank is simply serving a public role as a lender, it deserves to be bailed out. <ref>L. Randall Wray, [http://www.huffingtonpost.com/l-randall-wray/senator-blanche-lincolns_b_547752.html "Senator Blanche Lincoln's Derivatives Reform Bill Must Pass,"], "Huffington Post, April 22, 2010. Wray continues to frame Lincoln's bill in this manner: "Here is the choice she offers: you can continue with your derivatives, acting against the public interest, or you can be a bank. You cannot be both. Take your choice: blood-sucking vampire squid? Or, serve the public interest. If you go for squid, you lose all public protection. In that case, you go "free market" with all that entails-higher costs of borrowing, 100% downside risk, and prosecution when you lie and deceive." <ref>Id.</ref>