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House subcommittee approves repeal of section 716 of Dodd-Frank

Nan HayworthThe House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises on Tuesday approved a group of bills to reduce new regulations aimed at the $601 trillion swaps market.

A measure to repeal the so-called “push-out” provision requiring depository banks to transfer derivatives trades to an affiliate was amended and agreed to on a recorded vote of 21-12, Bloomberg.com reports. The provision, which is section 716 in last year’s Dodd-Frank Act, forces banks with access to deposit insurance from the Federal Reserve’s discount window to move some of their derivatives transactions into an affiliate.

“There are broad-based objections to 716 as actually creating more risk than it might mitigate,” Rep. Nan Hayworth (R-N.Y.), the bill’s sponsor, said, according to Bloomberg.com. “Banks are the heaviest regulated and safest entities within holding companies.”

Other bills that passed during the markup include the Retirement Income Protection Act of 2011, the SEC Regulatory Accountability Act and the Swap Execution Facility Clarification Act.

The subcommittee also approved a measure that would exempt inter-affiliate swaps from certain regulatory requirements put in place by the Dodd-Frank Act.

Rep. Maxine Waters (D-Calif.) said that she was concerned that Congress seems to be “meddling too deeply” in the rulemaking process.

“I have no reason to believe that they won’t be responsive to legitimate industry concerns,” Waters said, Bloomberg.com reports.

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