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Sen. Blanche Lincoln’s derivatives-spinoff plan gains support in Congress

Reading: Sen. Blanche Lincoln’s derivatives-spinoff plan gains support in Congress

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An effort to force some of the nation’s biggest banks to spin off their lucrative derivatives-dealing operations appears to be gaining traction, as members of a House-Senate conference begin finalizing details of far-reaching new financial regulations.

The measure, championed by Sen. Blanche Lincoln (D-Ark.), was included in the financial overhaul bill recently passed by the Senate. It had been opposed by Obama administration officials, some lawmakers in both parties, multiple banking regulators and Wall Street. Lincoln is seeking to restrict federal aid to banks that operate as major derivatives dealers.

If enacted, the controversial measure likely would mean a significant hit to the bottom line of big banks such as Goldman Sachs and J.P. Morgan Chase. At their most simple, derivatives are financial bets on the future value of something, such as airline fuel or mortgages.

Continue Reading at Washington Post.

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