BARNEY'S DERIVATIVE RUBBISH: A "NULL SET"

BANZAI7 NEWS--Two federal regulators criticized parts of Rep. Barney Frank's proposal to overhaul financial regulation, saying it will let large companies escape restrictions on the types of financial products that contributed to last year's crisis.

Wall Street firms have pressed Mr. Frank, chairman of the House Financial Services Committee, to tone down the Obama administration's plan to have all "standard" derivative products trade on regulated exchanges or electronic platforms.

A plan offered by the Obama administration would subject all swaps dealers and “major market participants” to new regulations for capital, business conduct, record-keeping and reporting. Frank’s version would exempt corporations from that definition if they use derivatives for “risk management” purposes.

While Frank’s proposal is a “step in the right direction,” its “ambiguous” definition of risk management may leave a large number of corporations unregulated, Henry T.C. Hu, director of the SEC’s new division of risk, strategy and financial innovation, told the committee.

“As just about all swaps could be defined as being used for risk management purposes, we’re concerned that unintentionally the category of ‘major swap participant’ could have been narrowed so significantly, or even to a null set,” CFTC Chairman Gary Gensler told reporters after the hearing.

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BARNEY FRANK NEEDS THREE HEADS