White House Accused Of Foot-Dragging On Swap Rules
May 08 2009 - 1:05PM
Dow Jones News
A Democratic senator accused the Obama administration of
"slow-walking" plans for tighter regulation of financial
instruments known as derivatives.
Sen. Maria Cantwell, D-Wash., said it is taking far too long for
the Obama administration to put forward a proposal to regulate
credit-default swaps and other exotic instruments. She pressed Neal
Wolin, President Barack Obama's nominee for Deputy Treasury
Secretary, for details on when the Treasury would put that proposal
forward. Her comments came at a hearing of the Senate Finance
Committee to consider Wolin's nomination.
The lack of action to date "gives everybody the indication that
the administration is slow-walking needed regulatory oversight for
something that caused the biggest financial crisis for decades,"
Cantwell said. Investment strategies at insurer American
International Group Inc. (AIG) involving credit-default swaps
helped send the financial industry into a tailspin.
Cantwell noted that Wolin was serving as general counsel at the
Treasury Department in 2000 when the Commodity Futures
Modernization Act passed, which exempted over-the-counter
derivatives from regulation.
Wolin demurred when pressed for a precise timeline of when the
Treasury will put forward a framework for regulating the
instruments. He said he believes such a framework should include
aggregate position limits, regulate dealers, and improve price
transparency.
"There's no question that the derivatives market...requires
substantially more regulation," Wolin told the Finance panel.
According to media reports, Cantwell has already held up Senate
action on one nominee, Gary Gensler for chairman of the Commodity
Futures Trading Commission, who has been criticized for going along
with lax oversight of swaps and derivatives. A spokeswoman for
Cantwell couldn't immediately be reached for comment.
-By Martin Vaughan, Dow Jones Newswires; 202-862-9244;
martin.vaughan@dowjones.com