WASHINGTON — A compromise on derivatives, the last remaining sticking point in the Wall Street reform bill, lubricated the bill enough that it cleared the conference committee early this morning.
For much of the 20 hours of Thursday (then Friday’s) hearing, and frankly for weeks before that, the financial reform bill was stuck without enough votes because of questions on just how tough language on derivatives should be.
On one side of that divide was Arkansas Democratic Sen. Blanche Lincoln, the chair of the Senate Agriculture Committee, who wanted banks to spin off their derivatives desks in an effort to avoid the risky credit default swaps that have been blamed in part for causing the financial crisis.
On the other was the New York delegation, which worried that such tight rules would unfairly hamstring Wall Street firms and send trading overseas.
Collin Peterson’s compromise measure: Allow banks to keep the safest futures trades (things like foreign currency, precious metals, hedges and the highest-graded credit swaps), while forcing them to spin off sub-prime swaps and many deliverable commodities (agriculture, metals, energy fuels, etc.)
The conference report was approved by a 20-11 vote of House conferees and a 7-5 vote of Senate conferees.
The House and Senate are expected to take up the final version of the bill, which is no longer amendable, next week. The goal is that it be signed into law before the July 4th recess, and it appears they have the votes in the House and Senate to do it.