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What’s at Stake in Swaps Market as Congress Tussles Over Dodd-Frank 

December 12, 2014
Scott Patterson, Moneybeat (WSJ)

The brewing Congressional tussle threatening to upend the $1.1 trillion U.S. spending bill boils down to less than one-tenth of banks’ trading in so-called swaps.

But that’s still a significant amount of trading in the multitrillion dollar swaps market.

The controversy concerns a few lines in the budget that effectively hollow out part of the 2010 Dodd-Frank law that forced big U.S. banks to cease and desist from certain swaps trading activities.

The rule, commonly known as the “swaps push-out” provision, is seen by backers as a cornerstone of the law, since swaps—financial contracts that allow two parties to swap financial obligations, such as steady cash payments for floating interest rate payments—were at the heart of the financial crisis.

Banks have long opposed the rule, arguing it’s overly costly, hurts their clients—major industries such as utilities and airlines—and adds too much complexity in the financial system. For years, they’ve been fighting to roll it back. 

Read more: Moneybeat (WSJ)

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