U.S. House derivatives legislation designed to roll back some Dodd-Frank Act requirements won’t gain passage because Senate Democrats will resist reopening the 2010 regulatory law, Representative Jim Himes said today.
“If I were betting, I would say none of these bills will become law,” Himes, a Connecticut Democrat, said at a Bloomberg Government breakfast in Washington. “I don’t think there’s a lot of appetite in the Senate to get into which of these bills make sense and how are they balanced.”
Himes, who was a Goldman Sachs Group Inc. investment banker before being elected to Congress in 2008, sponsored a bill that would alter a requirement that banks with access to deposit insurance and discount borrowing move some derivatives trades to affiliates that are separately capitalized.
While his bill and six others that have been approved by the House Agriculture Committee could move on the House floor, they would be unable to win passage in the Senate, Himes said.
“It’s still a morality play between those who believe Dodd-Frank should be repealed in its entirety and those who believe it’s the received word of God and any attempt to alter it is obviously being a shill for the industry,” Himes said. “There’s not much room between those poles right now.”
The measures would affect derivatives units at banks such as JPMorgan Chase & Co. and Citigroup Inc.
Some House lawmakers are working to undo Dodd-Frank provisions even as the Commodity Futures Trading Commission and other regulators are trying to complete the overhaul. The House moves have been assailed by Senator Carl Levin, the Michigan Democrat who criticized JPMorgan over a derivatives bet by London-based traders that cost the bank more than $6.2 billion in losses last year.
Levin sent a letter to the CFTC on April 23 urging the regulator to apply its derivatives rules to London and other overseas offices of U.S. financial firms.