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From Securities Regulation Daily, January 8, 2015

Senate clears TRIA with relief for derivatives end-users

By Jim Hamilton, J.D., LL.M.

The Senate passed by a vote of 94 to 4 the Terrorism Risk Insurance Program Reauthorization Act, H.R. 26, which contains relief for non-financial derivatives end-users, such as airline companies hedging the price of jet fuel, from the margin and capital requirements of Title VII of the Dodd-Frank Act. A proposed amendment by Sen. Elizabeth Warren (D-Mass) to strip out the derivatives end-user provision was defeated on a 66 to 31 vote. Since the House passed the bill by a vote of 416 to 5 earlier this week, the measure is now cleared for the President, who is expected to sign it.

Applauding passage of TRIA with the relief for non-financial derivatives end-users, Financial Services Chair Jeb Hensarling (R-Tex) said that Congress would be negligent in its duties if it did not continually monitor and fix Dodd-Frank’s unintended consequences. One of which is the provision that requires burdensome derivatives margin regulations intended for Wall Street firms to apply to farmers, ranchers and small businesses.

Community banker on Fed. The measure includes a provision authored by Sen. David Vitter (R-La) that would require the Federal Reserve Board of Governors to have at least one member with community bank or community bank supervision experience.

Statement of policy. In a statement of policy issued last year, the White House expressed serious concerns with the end-user provision, in this TRIA-related bill that has broad bipartisan support. The White House said that broadening Dodd-Frank’s statutory exemptions is a complicated issue with serious implications for the health and stability of the financial markets. The main purpose of the bill is to reauthorize the Terrorism Risk Insurance Program; and the bill should not be used as a vehicle to add entirely unrelated financial regulatory provisions. The White House has not issued a statement of policy on the 114th Congress version of the bill. Despite the stated opposition to including the Dodd-Frank fix in the bill, the President is still expected to sign the measure.

MainStory: TopStory Derivatives

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