Senate Agriculture Committee Chairwoman Blanche Lincoln (D-Ark.) is still working through the details of her derivatives legislation that aims to crack down on banks in the multitrillion-dollar derivatives market.
The following are among the provisions under discussion, according to an aide:
- The bill aims to prohibit federal assistance to entities in the swaps business, including swaps dealers, security-based swaps, exchanges that can list swaps and clearinghouses. This is dubbed the anti-bailout provision.
- If a bank qualifies as a "swap dealer" or "major swap participant" then it would be forced to spin off or push out their swap desks, an aide said.
- The bill would require foreign exchange swaps and forwards to be regulated.
- Lincoln would impose a "fiduciary duty" on swap dealers when advising government entities or pensions plans, endowments or retirement plans.
- The bill would give regulators enforcement power to charge any person or dealer if they attempt to defraud a third party.