On Friday, the House approved a plan to overhaul the nation's financial regulatory system. House Speaker Nancy Pelosi, D-Calif., called it a clear message to Wall Street that the party is over. The bill includes major portions on futures and derivatives negotiated by House Agriculture Committee Chairman Collin Peterson, D-Minn. House Financial Services Committee Chairman Barney Frank, D-Mass., pulled provisions that Peterson said would have had unintended consequences for the Farm Credit system. The vote was 223 to 202.
The bill gives the Commodity Futures Trading Commission increased powers to police the role of institutional investors in energy and agricultural markets. In a floor speech, Peterson noted the bill strengthens confidence in trader position limits on physically deliverable commodities as a way to prevent excessive speculative trading. It will also call for international harmonization by requiring foreign boards of trade to share trading.
The House rejected an amendment that would have forced end users of derivatives such as utilities and farm companies to put up more capital to back the financial instruments they use. On the House floor Peterson said the target for greater regulation and oversight is not the end user but their swap dealer or major swap participant counterparty.