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Regional Banks Push Back Against Swaps ‘Push-Out’ Rule 

October 31, 2014
Victoria McGrane, Wall Street Journal

Regional banks are quietly joining the fight against one of the most hated Dodd-Frank provisions on Wall Street.

The target is the so-called swaps push-out provision, which requires banks to spin off certain derivatives trading activities into units that don’t enjoy access to the government safety net.

Lawmakers included the provision to help protect taxpayers from having to bail out banks felled by risky trading in swaps—a type of derivative product that played a central role in the 2008 financial crisis.

Banks argue the rule—slated to go into effect next year—would merely increase costs on corporations that use swaps to hedge against everyday business risks, like the cost of jet fuel or interest-rate changes, and could actually pose a greater risk to financial stability by pushing such trading out of regulated banks and into the shadows. Some regulators, including former Federal Reserve Chairman Ben Bernanke, raised similar concerns before and after its inclusion in the 2010 law.

Read more: Wall Street Journal

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