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What it took to dilute down derivative's regulations via Dodd-Frank
roadrunner
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Diluting Dodd Frank
An interesting read on all the intricacies involved in the final bill that passed. Was quite surprised that Gensler was considered as "unfriendly" to the banks in the way he modeled the original bill. When the financial industry realized the depths of the orig draft they spent the next 3 years lobbying the heck out of the CFTC. Of the 2200 or so official lobbying visits to the CFTC on the D-F bill, 2/3 were by banks, friends of the banks, and their lobbyists. Basically, one lobbyist every hour for 3 yrs. It's a wonder any work got done at the CFTC. Gensler originally proposed a 5 bid rule for swaps and a $100 MILL min in trades to designate a swaps dealer subject to the bill's regulation/reporting. In the final version those were compromised down to 2 bids and $8 BILL in swaps (to be dropped to $3 BILL several yrs later). It is estimated that maybe the bill will end up policing about 10-20% of all the otc derivatives. Those derivatives that are linked with an overseas entity are basically allowed to follow the rules of that nation (ie no rules in most cases). Even Barney Frank commented during the draft phase that he never intended for it to get as strict as Gensler was intending.
An interesting read on all the intricacies involved in the final bill that passed. Was quite surprised that Gensler was considered as "unfriendly" to the banks in the way he modeled the original bill. When the financial industry realized the depths of the orig draft they spent the next 3 years lobbying the heck out of the CFTC. Of the 2200 or so official lobbying visits to the CFTC on the D-F bill, 2/3 were by banks, friends of the banks, and their lobbyists. Basically, one lobbyist every hour for 3 yrs. It's a wonder any work got done at the CFTC. Gensler originally proposed a 5 bid rule for swaps and a $100 MILL min in trades to designate a swaps dealer subject to the bill's regulation/reporting. In the final version those were compromised down to 2 bids and $8 BILL in swaps (to be dropped to $3 BILL several yrs later). It is estimated that maybe the bill will end up policing about 10-20% of all the otc derivatives. Those derivatives that are linked with an overseas entity are basically allowed to follow the rules of that nation (ie no rules in most cases). Even Barney Frank commented during the draft phase that he never intended for it to get as strict as Gensler was intending.
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And how much chaos a little turbulence makes when it's leveraged:
Bloomberg about Swiss Francs