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A big step in regulatory reform this time

April 23, 2010 - Mike Maneval

Another step in regulatory reform was taken Wednesday when the Senate's agriculture committee passed tougher rules for derivatives. The measure, sponsored by Democrat Blanche Lincoln of Arkansas, garnered the support of one Republican, Charles Grassley of Iowa.

Washington Post blogger Ezra Klein indicates the measure demonstrates erosion in the financial sector's clout - as of a few weeks ago, measures I've been writing about promoted by the banking committee's chairman, Democrat Chris Dodd of Connecticut, were considered the toughest stance on financial regulation the federal government may take. Now, as Klein details, negotiations on a weaker plan by two senators, Republican Judd Gregg of New Hampshire and Democrat Jack Reed of Rhode Island have fallen apart and the measures favored by Lincoln, which Klein says were expected to moderate the final package, would more likely move policy toward more vigorous oversight when coupled with Dodd's proposals.

Tim Fernholz of the American Prospect says he agrees with the "general consensus" that Lincoln's proposals are "pretty strong," though he also examines ways the measure falls short of full transparency and allows for some loopholes. Fernholz observes in closing that he is "still concerned that these rules aren't drawn as tightly as they ought to be."


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