Blanche Lincoln may represent Arkansas in the US Senate — but given the pain she’s trying to inflict on New York’s financial sector, she might as well hail from London or Hong Kong.
With talks under way to reconcile House and Senate financial-reform bills, the powerful Agriculture Committee chairwoman is reportedly working overtime to resurrect a plan that would force banks to part ways with their lucrative derivatives-trading operations.
Which, in turn, would separate New York from a healthy chunk of its tax base — and a whole lot of jobs.
Few would dispute, of course, that the market for credit derivatives — complex bets about whether a company will default on its loans that were at the heart of the financial crisis — needs reforming.
But both the House and Senate bills do that already — by creating transparent marketplaces for the trades and requiring firms to put cash down before they bet.
Lincoln’s proposal, by contrast, is nothing but thoughtless Wall Street-baiting.
And the threat to New York is real.
As the Manhattan Institute’s Nicole Gelinas points out, forcing banks to form entirely separate corporate entities to make derivatives trades severely weakens their incentive to keep those operations in New York — especially with global financial centers like London beckoning.
Mayor Bloomberg also opposes the measure. “It will send jobs overseas,” a spokesman flatly predicted.
Heck, even the Treasury Department and the FDIC hate Lincoln’s plan, on the grounds that it’ll push derivatives trading into less-regulated areas.
And Sen. Chuck Schumer?
He demurred on the details when queried yesterday, but insisted, “We need a bill that will . . . create jobs in New York rather than destroy them.”
Right on.
Getting Lincoln’s language killed won’t be easy, given the nation’s current antipathy toward Wall Street.
But Schumer has demonstrated formidable legislative skills in the past, and we’re confident that the state will be well-represented this time around.
Best of luck, Senator.