U.S. House Offers Compromise on Lincoln Swaps-Desk Provision

June 25 (Bloomberg) -- U.S. House lawmakers negotiating a financial-regulation bill offered a compromise on derivatives oversight aimed at breaking an impasse over a Senate measure that would force banks to push swaps-trading into subsidiaries.

Representative Collin Peterson today proposed letting banks such as JPMorgan Chase & Co. and Citigroup Inc. trade interest-rate swaps, foreign exchange swaps and instruments deemed as “hedging for the bank’s own risk” as an alternative to a sweeping ban proposed by Senator Blanche Lincoln.

The plan outlined by Peterson, the Minnesota Democrat who leads the House Agriculture Committee, would still require banks to use subsidiaries for trading of non-investment grade entities, commodities and credit-default swaps not cleared through an exchange.

Lincoln, the Arkansas Democrat who leads the Senate Agriculture Committee, hasn’t agreed to accept Peterson’s modifications. She and her Senate colleagues may counter the House offer with their own proposed compromise.

White House and Treasury Department officials have been working with House-Senate conferees to craft a compromise on the Lincoln proposal for much of the past two days. The measure is part of a broader financial bill aimed at overhauling Wall Street’s regulations after the worst financial crisis since the Great Depression.

Representative Barney Frank, the Massachusetts Democrat leading the congressional negotiations, said he thought the language would go “a little further than I would go, but it’s the best compromise we can get.”