Score a legislative victory for Sen. Blanche Lincoln.
Yesterday, Arkansas’ senior senator led the passage of a strong regulatory measure to reign in oversight of risky financial transactions known as derivatives. The bill would:
• Regulate foreign currency swaps.
• Bar any “major swaps dealers,” including big banks, from receiving federal financial assistance in the event of a market meltdown.
• Require dealers to consider their “fiduciary duty” to all governmental agencies, pension plans, endowments or retirement funds during any transaction.
• Beef up investigations and legal actions against swaps dealers or other traders if they engage in a transaction with another party knowing the deal could be used to defraud other investors or the public.
There are exemptions in Lincoln’s bill that benefit the “non-financial” sectors that use derivatives, such as electric co-cooperatives and farmers.
Lincoln’s bill passed out of the Senate Agriculture Committee which she chairs on a 13-8 vote. Republican Sen. Charles Grassley of Iowa was the only GOP vote for the measure.
"The Senate Agriculture Committee has taken a significant step toward bringing real reform to our nation’s financial markets, providing the transparency and accountability that the American people deserve in a bipartisan way,” said Lincoln. “My bill will bring the $600 trillion derivatives market out of the dark and into the light of day, ending the days of backroom deals and putting this money on Main Street where it belongs."
The bill heads to the Senate floor where it should be rolled into a larger financial regulatory reform bill passed by the Senate Banking Committee and expected to be considered by the full Senate next week.
Lincoln’s main primary challenger, Bill Halter, said the bill was a step in the right direction, but he criticized Lincoln for waiting to bring the reform measure forward.
“While I applaud this bill as a step in the right direction, it comes far too late for millions of Americans and thousands of Arkansans. Too many in Washington stood by for too long as hard-working Arkansans lost their jobs, had their homes foreclosed and had their savings wiped out,” Halter said.
A Halter campaign spokesperson said the only reason Lincoln brought the bill forward was due to her tough re-election bid.
"What’s clear is that Sen. Lincoln only saw the light and chose to take action when facing a tough challenge from Bill Halter," said Halter campaign manager Carol Butler. "It’s taken Sen. Lincoln 17 years to finally take a stand all while taking over $1.3 million in contributions from Wall Street, including $4,500 from Goldman Sachs in the past year.”
Goldman Sachs is under investigation by the SEC and the financial firm has become a liability for a number of politicians who have received contributions from the company, its PAC, and its employees.
Politico reported yesterday that Lincoln cancelled a Monday fundraiser with Goldman Sachs in the wake of the SEC investigation. However, the Lincoln campaign disputed the assertion that an event was planned and said it would disassociate itself with Goldman Sachs, but not return contributions already received.
"There were discussions last month about a meet and greet in New York with Goldman Sachs employees. Nothing was scheduled and therefore, nothing was cancelled," said Lincoln’s campaign spokeswoman Katie Laning Niebaum.
"In light of the S.E.C. lawsuit against Goldman Sachs, Senator Lincoln will schedule no future campaign-related events with the firm and will accept no further contributions from the firm’s Political Action Committee or its employees. Senator Lincoln has received a total of $7,500 in campaign contributions from the Goldman Sachs Political Action Committee and no contributions from employees for the 2010 election cycle."
She added, "The contributions have no impact on Senator Lincoln’s public policy decisions, as evidenced by her Wall Street reform bill, which was heralded today as it passed the Senate Agriculture Committee with bipartisan support."