Senate’s Crapo Withdraws Swaps Measure After Democrat Assurances

U.S. Senator Mike Crapo withdrew a plan to overhaul a Dodd-Frank Act derivatives measure after Democrats assured the Idaho Republican that they would work with him to address concerns about regulatory overreach.

Lawmakers including Senator Debbie Stabenow, the Michigan Democrat who leads the Agriculture Committee, “have indicated a willingness to help try and achieve these objectives,” Crapo said today on the Senate floor.

The amendment proposed by Crapo would have restricted Commodity Futures Trading Commission funding for implementation of Dodd-Frank until the agency provided quantitative analyses and assessments of the impact of the new rules on the derivatives market and the broader economy as well as an analysis of international efforts to harmonize oversight.

Crapo’s plan also would’ve required the CFTC to limit its regulatory reach into foreign subsidiaries -- an issue that has drawn bipartisan support on Capitol Hill. It also aimed to restrict the agency’s ability to require corporate end-users -- companies that use derivatives to hedge against business risk -- to post margin.

Dodd-Frank, the regulatory overhaul enacted last year, charged the CFTC and the Securities and Exchange Commission with oversight of derivatives market after largely unregulated trades contributed to the 2008 credit crisis. The Senate Agriculture Committee oversees the CFTC, which is writing rules for the $601 trillion swaps market.

Derivatives, including swaps, are contracts whose value is based on stocks, bonds, loans, currencies or commodities, or linked to specific events such as changes in interest rates.

Crapo’s decision to withdraw the amendment came the day after bipartisan agreement in the House on restricting the reach of Dodd-Frank on U.S. banks’ transactions with foreign entities. Representatives Scott Garrett, a New Jersey Republican, and Jim Himes, a Connecticut Democrat, introduced legislation yesterday aimed at limiting how regulators can apply derivatives regulations to overseas transactions.

To contact the reporter on this story: Phil Mattingly in Washington at pmattingly@bloomberg.net.

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net