Reply #130: LOOK TIMMY'S TRYING TO PULL HIMSELF OUT OF THE WELL!

[Demeter]

Geithner Letter Could Steer Derivatives Debate Away From Ban on Banks

http://online.wsj.com/article/SB10001424052702304510004575186813257960540.html?mod=dist_smartbrief

Treasury Secretary Timothy Geithner said Thursday in a letter that tight restrictions on derivatives is "at the core" of a sweeping overhaul of financial rules but didn't call for the outright ban on trading by banks that some Democrats are pushing.

Mr. Geithner, in a letter to Senate Agriculture Committee Chairman Blanche Lincoln (D., Ark.), said new financial rules must create restrictions on how over-the-counter derivatives are traded "in order to curb abuses that were at the very center of the financial crisis." But he notably stopped short of endorsing a proposal from Ms. Lincoln to force large banks to spin off derivatives trading businesses entirely.

His letter is the latest in a forceful push by the Obama administration to counter a lobbying effort by financial companies to scale back the derivatives rules.

Mr. Geithner's two-page letter also could be an attempt to steer Ms. Lincoln's bill away from one of its most controversial elements – a requirement that large U.S. banks completely spin off their derivatives trading businesses. While he doesn't address this requirement in his letter, he does specify the exact requirements White House officials believe would accomplish tighter derivatives trading requirements. That could give Democrats cover to scale back her proposal while still toughening rules....