NY lawmakers express concern about derivatives rules
By Peter Schroeder – 05/17/11 12:13 PM ET
(Click Here to read the article from The Hill Newspaper website)
New York lawmakers have concerns about proposed rules on financial derivatives that they fear might hinder American companies abroad.
In a letter sent to financial regulators Tuesday, New York’s bloc of Democrat and Republican lawmakers said they are worried that new rules on financial derivatives could undermine the competitiveness of U.S. companies.
“Adopting these rules would accomplish little more than reducing the competitiveness of U.S. financial institutions vis-à-vis their international counterparts and causing them to lose business to foreign entities through regulatory arbitrage by their non-U.S. customers,” the lawmakers wrote.
Under proposed rules, foreign affiliates or subsidiaries of U.S. companies doing business with non-American entities would have to meet new margin requirements on derivatives — requiring them to put up more collateral to enter into the deals. However, foreign companies doing business with one another would not have to meet the new requirements.
The lawmakers said that, ideally, they’d like international regulators to adopt the same rules. But absent that, the U.S. should not apply that standard to foreign deals involving domestic companies.
GOP members of the House Financial Services Committee pounced on the letter, suggesting that if New York Democrats have concerns about the rules, they should back legislation being considered that would delay them.
The committee is due to mark up legislation Tuesday that would delay the implementation of Dodd-Frank rules on derivatives for 18 months, until the end of 2012. Reps. Carolyn Maloney, Gregory Meeks, Carolyn McCarthy and Gary Ackerman are the New York Democrats on that panel.
But conservatives were not optimistic the concerns aired in the letter would turn into support for the bill at the markup.
“Only time will tell, but it’s not likely,” Republicans wrote on the committee’s blog. “To quote New York City’s own Paul Simon, these Democrats will probably be ‘slip sliding away’ from that letter during the markup.”
In addition to Maloney, Meeks, McCarthy and Ackerman, the lawmakers signing on to the letter were: Sens. Chuck Schumer (D) and Kirsten Gillibrand (D), and Reps. Yvette Clarke (D), Joseph Crowley (D), Eliot Engel (D), Chris Gibson (R), Michael Grimm (R), Richard Hanna (R), Nan Hayworth (R), Steve Israel (D), Peter King (R), Tom Reed (R), Edolphus Towns (D) and Anthony Weiner (D).