Congress Set To Ease Rules On Derivatives

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A provision in the $1 trillion-plus spending bill now before the Senate changes financial regulations to allow banks to trade in derivatives with money that is backed by taxpayers.

Unregulated trading in derivatives was one of the key causes of the financial crisis that shook the world's economy. It's also what led to massive losses at the insurance giant AIG, which had to be rescued by the federal government.

A key rule in the Dodd–Frank Wall Street Reform and Consumer Protection Act to regulate the financial markets requires banks to move high-risk investments like derivatives to accounts that are not backed by taxpayers.

Now, the "Cromnibus" spending bill includes language that eases those requirements, allowing banks to use money backed for example by FDIC to trade in derivatives.

Banks have been lobbying hard for the change, and JPMorgan Chase CEO Jamie Dimon personally called lawmakers yesterday to ask them to vote for it.

The White House says the president is willing to accept the changes as part of compromise bill, but a group of Democrats led by Senator Elizabeth Warren of Massachusetts are expressing their strong opposition to it.

Mike Regan of Bloomberg News spoke to Here & Now's Robin Young about the measure.


This segment aired on December 12, 2014.


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