There was muted celebration on Wall Street in the small hours of this morning as amendments backed by Blanche Lincoln and Paul Volcker to the Wall Street Transparency and Accountability Act were weakened by compromise clauses.
Lawmakers worked late into the night thrashing out an agreement on unifying the Senate and House of Representatives’ financial reform bills. That process is now largely complete and a House vote on the merged bill has been scheduled for Tuesday.
While the final details of the agreement have yet to emerge, it seems clear that Senator Lincoln’s proposal for banks to be forced to move their swaps trading desks into separately capitalised vehicles has been watered down. Reports suggest trading which qualifies as hedging a bank’s own risk – including at least some trading in interest rate swaps and forex swaps, which make up the vast bulk of the...