* Proposal would protect end-users from higher costs
* Identical proposal was adopted in House committees
* Treasury's Lew warns not to tinker with Dodd-Frank
By Douwe Miedema and Sarah N. Lynch
WASHINGTON, May 8 A bipartisan group of 12
senators is seeking to exempt non-financial companies from new
rules to make banking safer, breathing new life into efforts to
reduce the scope of the Dodd-Frank overhaul of Wall Street.
The plans are squarely at odds with a warning from Treasury
Secretary Jack Lew, who urged the Republican-controlled House of
Representatives this week not to make any changes to the broad
law drawn up after the 2007-09 credit meltdown.
"These reforms should not be weakened or repealed," Lew said
in a letter to Representative Jeb Hensarling, chairman of the
House Committee on Financial Services, referring to a raft of
bills the panel has since adopted.
Now two senators have introduced a proposal to exempt
companies using derivatives to protect against losses - and not
to speculate on markets - from rules that would require them to
pay high safety margins.
Backed by 10 other lawmakers from both parties, the bill is
identical to one of nine measures adopted by the House committee
on Tuesday, but which few people thought stood a chance of
passing Congress because the Senate has a Democratic majority.
The proposal by Senator Mike Johanns, a Republican from
Nebraska, and Senator Jon Tester, a Montana Democrat, gives
critics of the 2010 financial overhaul a shot in the arm.
"The Coalition for Derivatives End-Users, and the hundreds
of businesses it represents, applauds this bipartisan
legislation and looks forward to Senate action," the lobby group
that is pushing for the rule change said.
Dodd-Frank aims to make the $650 trillion derivative markets
less risky by putting clearing houses between buyers and
sellers, forcing them to pay costly safety margins.
The two main derivatives regulators - the Commodity Futures
Trading Commission and the Securities and Exchange Commission -
have already made clear that end-users are exempt from clearing,
and thus also from the margin requirements.
But the Senate bill would also include a rule issued by the
Federal Reserve that calls on banks to impose margin
requirements on all users of the most complex types of swaps,
which do not need to be cleared.
The House proposal, adopted unanimously in the financial
services committee on Tuesday, also has been vetted by the House
"I'm encouraged that such a large group of bipartisan
senators are joining the House's good fight to protect farmers,
ranchers, and businesses from costly margin requirements," said
Representative Frank Lucas, chairman of the House Agriculture
The proposal, launched on Tuesday, has been put on the
Senate calendar, and it is up to the Democratic majority to
decide if and when it should move forward.