Obama administration officials have put hurdles in the way of “meaningful” financial regulatory reform, which includes first-time regulation of the nearly $500 trillion over-the-counter (OTC) derivatives market, said a Republican senator Tuesday.

“My staff and I have worked diligently over the past several months with Chairman [Blanche] Lincoln to craft a bipartisan plan that we believe would have received wide bipartisan support in the Senate Agriculture Committee,” which has jurisdiction over OTC derivatives, said Sen. Saxby Chambliss of Georgia, the ranking Republican on the Senate panel.

“Unfortunately, the White House, Secretary Geithner and Chairman Gensler have forced politics in the pathway of meaningful financial regulatory reform,” he said, referring to Treasury Secretary Timothy Geithner and Gary Gensler, chairman of the Commodity Futures Trading Commission.

“They seem to be intent on making this a partisan issue without Republican input, which in no way benefits the American people who have endured economic distress as a result of the recent financial crisis. Partisan politics have no place in economic policy,” said Chambliss, whose comments precede a White House meeting on financial regulatory reform.

The Senate reform bill, which cleared the Senate Banking Committee in late March, calls for regulation of the heretofore unregulated OTC derivatives market (see Daily GPI, March 24). But unlike the bill passed by the House in December, it does not give end-users, such as producers and industrial customers, a blanket exemption from the requirement that OTC transactions be cleared and traded on regulated exchanges. Gensler opposes exemptions.

Instead the Senate bill gives the CFTC and the Securities and Exchange Commission the authority to exempt a derivative swap from the clearing-trading requirements if one of the parties to the swap is not a swap dealer or a major swap participant (financial institution), or no derivative clearing organization will accept the swap for clearing. In contrast, the House bill carves out a specific exemption for commodity trades involving end-users or commercial traders hedging commercial risk (see Daily GPI, Dec. 14, 2009).

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