Cantwell will vote for financial reform bill

Sen. Maria Cantwell, D-Wash., who voted against a Senate-crafted financial
reform bill saying it was too weak, is giving badly needed support to a stronger
version of the legislation worked out by a Senate-House conference
committee.

Cantwell

Cantwell was one of only two Democratic senators to vote against the Senate
version of the bill.

Cantwell said the conferees’ version holds significant improvements over the
original Senate bill, especially in its language requiring transparency in
derivatives markets and tough penalties for evading the clearing and exchange
trading requirements for derivatives.

The House on Wednesday voted 237-192 to pass the conferees’ version of the
bill.

Especially after the death of Sen. Robert Byrd, D-W. Va., Cantwell’s vote is
needed for Democratic leaders in the Senate muster the 60 votes needed to cut
off debate and move the legislation to final passage.

Only one Republican, Sen. Susan Collins of Maine, has indicated she will
support the bill.

Cantwell is a member of the Senate Finance Committee, and has made tougher
regulation of derivatives into a defining cause.

In a letter to Cantwell on Thursday, the chairman of the Commodities Futures
Trading Commission assured her that the bill “explicitly requires that swap
dealers, major swap participants and financial entitles use a claringhouse for
standardized or ‘clearable’ derivative transactions.”

Under a provision of the conferees’ legislation, buying and selling of
derivatives would go to clearinghouses. Banks would have to put up collateral
against each and every trade.

Some portion of trading of derivatives would occur in exchanges. Prices would
be available and visible to the public. The New York Times predicted last
weekend that this measure would push down prices – and banks’ profit
margins.

Banks would also have to hold a greater amount of capital in reserve to cover
potential losses in trading. In certain instances, they may be forbidden to use
federally insured bank deposits for risky trades.

“Since even before the financial crisis of fall 2008 I have been fighting to
bring the $600 trillion derivatives market out of the dark, unregulated betting
hall where it has existed and into the bright light of transparency and
regulation,” Cantwell said late Thursday.

“This legislation is not perfect, and I will continue to push for even bolder
action — including a return to the Glass-Steagall separation of commercial and
investment banking — to reign in Wall Street, put an end to the concept of ‘too
big to fail.’

“But this bill makes significant strides toward preventing the kind of
financial meltdown that we saw in the fall of 2008.”

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