This story appeared in Bank Digest.
The House has passed the Swaps Regulatory Improvement Act (H.R. 992) by a vote of 292 to 122. Sponsored by Rep. Randy Hultgren (R-Ill), the measure amends Section 716 of the Dodd-Frank Act, the bank derivatives push out provision, to allow banks to continue to conduct risk-mitigation efforts for clients, such as farmers and manufacturers, who use swaps to insure against price fluctuations. The bill also modifies Section 716 to allow commodity and equity derivatives in banks with federal deposit insurance. However, derivatives involving structured finance transactions would still need to be pushed out of a federally insured financial institution. Currently, Section 716 prevents federally insured banks from conducting certain swaps trading, including trading of commodity, equity, and credit derivatives. This prohibition compels banks to push out swaps trading into separately capitalized non-bank affiliates. Seventy Democrats voted in favor of the measure.