Still Concerned about Derivatives

By June 11, 2010General

The House of Representatives appointed conferees Wednesday to H.R. H.R. 4173, the Wall Street Reform and Consumer Protection Act, i.e., the financial regulation bill. The conference committee work will begin in earnest next week, and the National Association of Manufacturers and other business groups are still very concerned about proposed language on derivatives.

The Wall Street Journal reports today, “Democrats Spar Over Derivatives Rules“:

WASHINGTON—Democratic efforts to swiftly steer a financial-overhaul bill into law stumbled as House and Senate leaders clashed over how best to regulate the $600 trillion derivatives market.

The question, while highly technical, is a central component of the bill and would have wide-ranging consequences for U.S. businesses that use the complex financial instruments to protect themselves from fluctuations in currencies, interest rates and commodity prices.

The Journal notes the NAM letter sent Thursday to the conference committee highlighting manufacturers’ views on the legislation, emphasizing the need to preserve the ability of end users to use derivatives to manage risk. The broad point:

The National Association of Manufacturers (NAM) – the nation’s largest industrial trade association – appreciates and supports the efforts of policymakers to improve transparency, accountability and stability in our nation’s financial system. As you work to craft a compromise version of the Wall Street Reform and Consumer Protection Act (H.R. 4173), we urge you to focus on strengthening the U.S. financial system and avoiding new regulations that could be costly and could hinder job creation for manufacturers and other non-financial companies that had nothing to do with the financial crisis.

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