Some U.S. Companies Will Receive Pass On New Rules, Geithner Says

WASHINGTON -- Treasury Secretary Timothy Geithner has decided to let companies continue to trade certain contracts used to guard against swings in currency values outside regulators' view.

New rules require that many such trades occur more transparently, on exchanges where regulators can see them. But Geithner is exempting certain contracts used by companies to hedge currency rates.

The new financial overhaul law authorized Geithner to carve out such an exemption to stricter regulation.

Business groups argue that tighter oversight of such contracts would be costly and unnecessary. But critics, including some regulators, counter that the entire market for financial contracts called over-the-counter derivatives should face stricter supervision.

The value of derivatives hinges on an underlying investment, such as currencies, stocks or mortgages. Speculators using over-the-counter derivatives helped fuel the 2008 financial crisis.

Treasury's top markets official said the contracts already include many of the safeguards imposed by the new rules. For example, information on the price for each contract is available from a number of sources. The contracts often are traded on electronic platforms.

Imposing new rules would mean "introducing an additional process into what is a very well-functioning market today, and you would be putting more steps into the settlement process," said Treasury's Assistant Secretary for Financial Markets Mary Miller.

The swaps that Geithner carved out account for about $30 trillion of the $600 trillion global market for over-the-counter derivatives, Treasury said. The new rules will apply to currency swaps, options and other contracts used for similar purposes.

The decision technically is a proposal. Treasury will accept public comments for 30 days before finalizing the exemption.

Comments

[sking007]

04:09 PM on 05/03/2011

If one was to be a financial Nostradamus I would place my bets on building that survival compound in the backyard. If there is one common thread we have yet to untangle it's the systemic volatility of our financial system. Apparently, we have not learned anything from our near financial system meltdown to address the sheer complexity of the CDL market place. Let's make special exemptions for things we don't understand because it could trigger fear in something else we don't quite understand.

[tribilin219]

04:31 PM on 05/02/2011

How long is Obama going to keep this Crook on he's job, working for he's masters in Wall St? He and a few more from Wall St should be be in Jail and not in a sweet job taking from the poor and giving to the rich. And this guy gives me the creeps.

[yakmon]

04:18 PM on 05/02/2011

What's your cut Tim?

It's time this clown was shown the door.

[yakmon]

01:42 PM on 05/03/2011

Truly Timmy is as dishonest as the Governor of Wisconsin—political payback means exemptions to the rules.

This should not be tolerated at all from either side.

[GerryS]

02:54 PM on 05/02/2011

timmy-

is it a rule, or an exception to a rule???????????????

[mgrant33301]

02:22 PM on 05/02/2011

gentlemen, if you don't change what broke us in 08, it will break again. wall street will not "do the right thing".
bring back glass-steagal.

[GerryS]

02:55 PM on 05/02/2011

exactly,,,,,,,,, fanned and faved-----------

[Thomas Rowe]

10:51 AM on 05/02/2011

He is the dealer in this house of cards. Great!!! Who needs those stinking rules?

[nypapajoe]

10:38 AM on 05/02/2011

USA Today edit board criticizes GOP for trying to scrap Consumer Financial Protection Bureau: "The 2010 law already places an unprecedented check on the bureau. A 10-member council of financial regulators can veto many bureau actions by a two-thirds vote — a power not granted over any other financial regulator. Republicans, who will vote in committee on the changes Wednesday, want to strengthen that veto power so much that a single council member could delay and threaten just about any bureau action — turning the bureau into an expensive, ineffective pawn of the lenders it would oversee." 

[beinghuman2]

02:47 AM on 05/02/2011

their is a glitch in the feds new banking rule. as long as the bank charges less than $ 10,000. on a mortgage, they can do anything they want.

[mikey53154]

11:53 PM on 05/01/2011

Do you truly believe this product of wall street is concerned aboutg our
well being?

[Tiggy]

09:16 PM on 05/01/2011

Timothy Wall Street Geithner should be kicked out on his Ar*e! If Obama plans to redeem himself and fulfill his promise of change, then he had better ready up his kicking foot and practice his aim!

[shadow013]

01:04 AM on 05/02/2011

Obama came in with a preconceived agenda. Handling a serious financial crisis was not what he planned. We didn't exactly elect an FDR who at least took the depression seriously. Obama has not looked at parallels with 1929, how it happened or what helped or what did not work to alleviate the problems.

[MANOFCOMMONSENSE]

11:45 AM on 05/01/2011

People need to see the Movie ( Inside Job with Matt Damon ) Sadly Obama hired some of those same people who caused those problems at Wall Street

[FOXYROSE]

09:36 AM on 05/01/2011

Nothing has changed - too big to fail is bigger than ever - it is really time to clean house and to change the way this gov operates - it is not working for the people, only for the rich world wide.

[FOXYROSE]

09:34 AM on 05/01/2011

Well, Obama put this tax cheat in office - what did you expect. On the other hand, the next person would probably be the same - we just can't win!

[beinghuman2]

02:51 AM on 05/02/2011

he used turbo tax. I use turbo tax and it doesn't give me all my exemptions. I guess, I didn't use it right!

[agathacallie]

12:21 AM on 05/01/2011

"Multinational corporations such as Cargill and 3M argued for the exemption. They said the new rules would have raised their costs, thereby limiting their ability to grow and create jobs." Such a charming company, that Cargill:

"Globalisation gives Cargill a further opportunity to extract wealth from the public, by tax avoidance. Cargill's commodity trading arm Tradax International is based in Panama, a tax haven, and much of the profit from Cargill's international trades are accounted on Tradax.

http://archive.corporatewatch.org/publications/GEBriefings/controlfreaks/cargill1.html

http://www.bostonherald.com/business/general/view.bg?articleid=1334284&srvc=business&position=recent

[tosc]

11:45 PM on 04/30/2011

this guy is an egotistical climber who thinks he has all the answers, but his answers don't seem to be coming to fruition....