New York lawmakers are coming to the rescue of some major US banks.
The Senate agricultural committee is set to host hearings as early as mid-June to discuss new derivatives rules, which have become a hot-button issue on Wall Street, The Post has learned.
US legislators, including Sens. Chuck Schumer and Kirsten Gillibrand, have been fighting on behalf of firms like JPMorgan Chase, Goldman Sachs and Morgan Stanley, arguing that new rules on complex derivatives securities being hammered out under the Dodd-Frank regulatory reforms put domestic banks at a “competitive disadvantage.”
Sources say that the agricultural committee likely will host the hearings either the second or third week of June and will likely call in Federal Reserve boss Ben Bernanke and Commodity Futures Trading Commission chairman Gary Gensler to help hammer out how best to apply the new rules.
At issue are derivatives rules that would force US banks to require their clients to post money as collateral on certain complex derivatives transactions known as swaps.
If implemented, the Dodd-Frank rules would force the US financial institutions and their foreign subsidiaries to impose additional collateral, or margin, requirements on its clients.
At the same time, foreign banks would not be required to demand the same collateral from their clients — potentially putting US banks at a disadvantage.
CEOs including Morgan Stanley’s James Gorman and Jamie Dimon have publicly blasted the rules as unfair.
Talk of the hearing comes after the New York delegation, led by Schumer and Gillibrand, sent a letter to top regulators asking them to reconsider that aspect of the rules.
Banks and lawmakers argue that the new rules, which would apply to swaps and other derivatives contracts tailor-made for specific companies, would drive potential clients to foreign banks institutions that aren’t required to impose the added charges.