| WASHINGTON, July 3
WASHINGTON, July 3 The U.S. Federal Reserve
granted Goldman Sachs two more years to push risky swaps
trading into a separate unit, in line with similar delays for
other big Wall Street banks.
The Dodd-Frank law, aimed at preventing future taxpayer
bail-outs, bans investment banks that trade derivatives from
using government backstops such as deposit insurance or access
to the Federal Reserve's discount window.
That means banks such as JP Morgan Chase, Citigroup
and Bank of America have to set up separate legal
entities to trade swaps, a lucrative business that was largely
unregulated before the crisis.
Most banks that trade swaps in June received a two-year
phase-in period provided under the law from a different bank
regulator, the Office of the Comptroller of the Currency.
The $630 trillion swaps market sprang up in the 1980s,
enabling companies to exchange virtually any financial risk with
other firms. It then quickly mushroomed into a huge playground
for hedge funds and other speculators.
With a July 16 deadline looming for the push-out provision
to come in force, the Fed was faced with either granting the
delay or telling Goldman to stop the business altogether.
"(The Fed) has determined that the potential impact of
granting a 24-month transition period is less adverse than the
potential impact of denying the transition period," the central
bank said in a letter dated July 2.
Goldman Sachs had no immediate comment.