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Utilities Exempt from House OTC Derivatives Restrictions House Resolution 4173, the Wall Street Reform and Consumer Protection Act of 2009, passed in December without amendments that would have prevented utilities’ use of over-the-counter derivatives to hedge fuel prices.
The bill, which passed 223 to 202, exempts end users like public power utilities from the mandatory clearing of OTC derivatives transactions thanks to an amendment that excludes nonfinancial companies that use derivatives to hedge against market fluctuations from the definition of “major swap participants.”
The legislation aims to give the government new oversight over banks in various previously under-regulated areas of the financial services sector. President Obama has described it as a step toward “a stronger, more stable financial system with better protections for consumers and investors.” Senate Banking Committee Chairman Christopher Dodd, D-Conn., has already put forth his draft reform bill and the Senate Agriculture Committee is expected to release one soon as well. Democratic leaders are aiming for final passage of the Senate reform bill in March. |
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