Huffpost Politics

Jim Himes, Former Goldman Sachs Executive, Introduces Bill To Roll Back Key Element Of Dodd-Frank

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JIM HIMES
Rep. Jim Himes, a former Wall Street executive, is introducing legislation that would deregulate derivatives. (Photo by Christopher Capozziello/Getty Images) | Getty Images

Rep. Jim Himes (D-Conn.), a former Wall Street executive, is joining Rep. Randy Hultgren (R-Ill.) to introduce legislation that would undercut one of the most meaningful elements of the 2010 Dodd-Frank Wall Street Reform Act.

The bill would "allow banks to keep commodity and equity derivatives in federally insured units," Politico reported on Wednesday, meaning that banks would no longer be forced to spin off their trading desks. It would weaken Dodd-Frank's "push out" provision, otherwise known as the Prohibition Against Federal Government Bailouts of Swaps Entities, which bars federal assistance from being provided to any swaps entity.

Derivatives -- which Warren Buffett has referred to as “financial weapons of mass destruction” -- are viewed as a key trigger of the 2008 economic crisis.

“We need financial regulation that allows businesses and the banks they use to have access to the tools that help keep prices of consumer goods—like groceries and home heating oil—steady, while ensuring that the taxpayers are never again on the hook for the types of wild bets helped crash the economy in 2008,” Himes said in a press release. “This bill maintains Dodd-Frank’s prohibition on that risky behavior at banks that are insured by the taxpayers while allowing businesses that produce products Americans use every day to continue to use swaps to maintain predictability in their operations and in the prices of their products.”

Himes, who was recently named the national finance chairman of the Democratic Congressional Campaign Committee, is a former executive at Goldman Sachs, where he was a vice president.

In 2010, Himes took heat from consumer advocates for opposing the Senate’s version of the financial reform bill, at which point he characterized derivatives as a “political football.”

“The discussion of derivatives in the political world has become a zero sum game,” Himes told the Connecticut Mirror. “But there’s a lot more common ground here than the people who are yelling about this would have you believe.

During a testimony before the Senate last week, Federal Reserve Chairman Ben Bernanke expressed support for Himes and Hultgren’s proposal, Politico reported.

This article was edited after publication to clarify the effect of the bill and updated to include a comment from Himes.

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