House approves bills easing rules on financial swaps

One of the bills is the Business Risk Mitigation and Price Stabilization Act, H.R. 634, which the House passed 411-12. This bill would exempt companies that use financial derivatives to hedge their risk from rules demanding that they put up collateral to make these hedges.

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The bill is meant to separate companies that genuinely use financial tools to manage price risk from pure speculators, whose positions in derivatives were seen as contributing to the 2008 financial meltdown.

"Companies that use derivative contracts to offset legitimate business expense were specifically exempted from the clearing requirements and Congress did not specifically direct regulators to require end users to post margin," said Rep. Gary Peters (D-Mich.). "Our bipartisan bill simply clarifies congressional intent that non-financial end users are exempt from the Dodd-Frank margin requirements."

Supporters said Dodd-Frank was not meant to increase the costs of manufacturers, farmers and others who use derivatives to manage risk. But they said uncertainty about how the law was written demands a clarification from Congress.

Separately, the House passed H.R. 742, the Swap Data Repository and Clearing house Indemnification Correction Act, in a 420-2 vote.

This bill would kill a requirement in Dodd-Frank that says U.S.-based entities that hold swap data — known as swap data repositories (SDRs) — can only share that data with non-U.S. regulators if those regulators agree to pay for any litigation that occurs as a result of sharing the data.

Congress has heard that foreign regulators are not prepared to offer this "indemnity," which means the sharing of swap data could be stifled by this Dodd-Frank requirement.

But the sharing of swap data is seen as a critical tool for regulators to judge the extent to which risk might be piling up in certain areas of the financial markets. So, the bill would eliminate the indemnity requirement in the hopes of removing this obstacle to the sharing of swap data.

Later in the day, members passed H.R. 1038, the Public Power Risk Management Act, giving utilities the ability to enter into energy swaps with other utilities without having to register as a swap dealer. This bill passed 423-0.

— This story was updated at 5:33 p.m. to add the last vote.

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