Senate Agriculture Committee Chair Blanche Lincoln (D-AR) Tuesday said her legislation was “real reform” that would provide “100% transparency” of the unregulated $600 trillion over-the-counter (OTC) market.

The bill, The Wall Street Transparency and Accountability Act, “[will] close all loopholes, prevent future bailouts and keep jobs on Main Street…America’s consumers and businesses will finally see a financial oversight system that promotes and fosters the most honest, open and reliable financial markets in the world,” she said.

The Senate agriculture panel, which will mark up the legislation Wednesday, is poised to take a significant step toward strong Wall Street reform, according to Lincoln.

Corporate titans got “richer by trading in the unregulated financial casinos on Wall Street” over the past decade, while the financial system failed the American people, said Sen. Tom Harkin (D-IA), former chairman of the committee.

“As the notional value of the over-the-counter derivatives grew from $95 billion in December 2000 to $683 trillion in June of 2008, the median household income for American workers failed to rise. We cannot allow these same reckless financial practices to continue unregulated into the future,” he said.

“The choice is simple: to allow Wall Street to continue to make the rules or to put in place common sense safeguards to protect consumers and the economy,” agreed Sen. Robert Casey (D-PA), a committee member.

James Dimon, CEO of JPMorgan Chase, said his company could lose “$700 million or a couple of billion dollars” if Congress cracks down on his bank’s lucrative derivatives business, the New York Times reported Monday.

And with so much money at stake, it’s no wonder that more than 1,500 lobbyists, executives, bankers and others are expected to make their way to the committee’s Wednesday mark-up, the newspaper said.

The OTC derivatives bill — if its clears the Senate Agriculture Committee — would be folded into the Senate Banking Committee legislation, which is headed for the Senate floor this week (see Daily GPI, April 19).The banking panel voted out broad legislation overhauling the financial regulatory system last month with no support from Republicans (see Daily GPI, March 24).

The Lincoln bill could significantly restrict trading by large Wall Street banks, such as JPMorgan Chase and Goldman Sachs Group, by barring swaps dealers from receiving any type of federal assistance (including federal deposit insurance and access to the Federal Reserve discount window) in connection with their trading of derivatives (see Daily GPI, April 16). As a result the measure could force the banks to spin off their lucrative derivatives operations.

It also would rein in commodities market speculation by forcing OTC derivative trades onto regulated exchanges and clearinghouses. However, large commercial traders would be exempted from mandatory clearing/trading if they are hedging commercial risk.

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