Senate Dems push for stronger international swaps rules

ADVERTISEMENT

"The sheer size and complexity of these institutions necessitates looking at each firm collectively, and across corporate forms and national boundaries," the senators write in the letter. "The activities of subsidiaries, affiliates, branch offices, and off-balance sheet entities may all lead to risk and losses that can devastate a financial institution, and the economy."

They add, "A wide range of offshore and cross-border transactions in swaps, including swaps where one of the counterparties is a foreign branch, foreign subsidiary, or foreign affiliate of a U.S. financial institution, have a direct and significant effect on the U.S. economy and financial stability."

In July, the CFTC proposed a system of "substituted compliance," whereby foreign regulatory oversight could stand in for Dodd-Frank Act rules, if the regulation is sufficiently rigid.

The group of Democrats wants the CFTC to increase the conditions for granting that substituted compliance by requiring that foreign government agencies sign an agreement to cooperate with the Federal Deposit Insurance Corporation. They also ask the CFTC to regularly review the foreign regulations to make sure the standards remain strong.

In the letter, the lawmakers also express concern about the lack of regulatory requirements for swaps that are not backed by an American person or firm.

"As we saw clearly in the 2008 financial crisis, and in previous crises, even when an activity or vehicle is legally separate from a U.S. person, the U.S. sponsor of that entity or activity steps in, placing the risk back onto U.S. taxpayers," they write.

The six signers on the letter are Sens. Sherrod BrownSherrod Campbell BrownCongress can defend against Russia by outlawing anonymous shell companies Democrats ask Fed to probe Trump's Deutsche Bank ties Democrats ask Fed to probe Trump's Deutsche Bank ties MORE (D-Ohio), Carl LevinCarl Milton LevinListen, learn and lead: Congressional newcomers should leave the extremist tactics at home House Democrats poised to set a dangerous precedent with president’s tax returns The Hill's 12:30 Report — Sponsored by Delta Air Lines — White House to 'temporarily reinstate' Acosta's press pass after judge issues order | Graham to take over Judiciary panel | Hand recount for Florida Senate race MORE (D-Mich.), Tom HarkinThomas (Tom) Richard HarkinStop asking parents to sacrifice Social Security benefits for paid family leave The FDA crackdown on dietary supplements is inadequate Wisconsin lawmaker refuses to cut hair until sign-language bill passes MORE (D-Iowa), Elizabeth WarrenElizabeth Ann WarrenBiden calls for equal pay for US women's soccer team Biden calls for equal pay for US women's soccer team Trump steadfast in denials as support for impeachment grows MORE (D-Mass.), Jeff MerkleyJeffrey (Jeff) Alan MerkleyDemocratic White House hopefuls push to expand health care in US territories Democratic White House hopefuls push to expand health care in US territories Hillicon Valley: Assange hit with 17 more charges | Facebook removes record 2.2B fake profiles | Senate passes anti-robocall bill | Senators offer bill to help companies remove Huawei equipment MORE (D-Ore.) and Dianne FeinsteinDianne Emiel FeinsteinNew push to regulate self-driving cars faces tough road Trump remarks deepen distrust with intelligence community Trump remarks deepen distrust with intelligence community MORE (D-Calif.).