A House panel voted today to regulate for the first time privately traded derivatives, the kind of exotic financial instruments that helped bring down Lehman Brothers and nearly toppled American International Group.
The 43-26 vote by the House Financial Services Committee, was a first major step for President Barack Obama’s plans to overhaul federal regulations governing the nation’s financial institutions.
The mostly party line vote showed that Democrats were prepared to band together to override objections by Republicans and the financial lobby and demand increased oversight of Wall Street.
No Democrat on the panel opposed the measure. One Republican, North Carolina Rep. Walter Jones, sided with them to approve it.
Next week, the panel is expected to approve another big piece of Obama regulatory plan that would create a federal agency dedicated solely to protecting financial consumers. Both measures would still face scrutiny by the full House, as well as in the Senate where business-minded Republicans are likely to wield more influence.
But for now, the administration is hailing today’s vote as a critical step toward throwing sunlight on an opaque and growing $600 trillion global market.
The bill “is absolutely essential to preserving a strong marketplace, preserving transparency (and) getting incentives right in the system,” said Michael Barr, Treasury’s assistant secretary for financial institutions.
“We don’t want to allow any firm like an AIG to be able to engage in derivatives transactions without requiring those transactions be reported and to be traded on an exchange,” he said. (AP)
