Cantwell hammers away on derivatives as showdown nears
Source: The Seattle Times
WASHINGTON -- As the Senate neared a denouement Tuesday over Wall Street overhaul, Sen. Maria Cantwell urged her fellow Democrats to hang tough on regulating her favored target for reform: derivatives trading.
Cantwell, from Washington state, assembled a half-dozen leading derivatives-reform advocates -- including the former counsel for the federal agency with key oversight authority over the complex financial instruments -- to push to end lax rules that helped to spawn the financial meltdown in 2008.
Cantwell's press conference took place as Senate Majority Leader Harry Reid was embroiled in a game of brinkmanship with Republicans, who are vowing to filibuster the financial reform legislation. The House has already passed its own bill, which in some ways is less stringent than the version that the Senate is expected to vote on soon.
By Tuesday afternoon, Senate leaders declared bipartisan negotiations to be back on track.
Joining Cantwell was Sen. Blanche Lincoln of Arkansas, chairwoman of the Agriculture Committee, who last week introduced a bill to rein in derivatives that Cantwell lauded as a tough "stare down of Wall Street. Lincoln in turn thanked Cantwell for her dogged focus on derivatives, a cause Cantwell took up long before most of her colleagues could even define it.
Lincoln's bill would require derivatives to be traded in public exchanges and through agents, doing away with the current opaque system that allows securities dealers to profit from buyers and sellers who don't know each others prices. Lincoln's proposal is expected to be incorporated as an amendment to the Senate Banking Committee's main financial reform bill.
The economic collapse was triggered mainly by the real estate bubble and the loans to sub-prime borrowers who couldn't repay their debts. But derivatives, which are a form of insurance, amplified the meltdown by allowing Wall Street to gamble on the economy while putting up little money to back up their bets, said Michael Greenberger, former Commodity Futures Trading Commission counsel who appeared at Cantwell's event.
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