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Wall Street May Get $40 Billion Reprieve from Regulators - ABI

Wall Street could soon get a key victory as regulators are considering ripping up a rule that’s forced banks to set aside billions of dollars for swaps trades, Bloomberg News reported. At issue is a requirement approved during the Obama administration that’s made lenders post tens of billions in margin when engaging in derivatives transactions with their own affiliates. Industry lobbyists have long argued that the demand, which came out of the 2010 Dodd-Frank Act, is redundant and puts U.S. banks at a competitive disadvantage to overseas rivals. The Federal Deposit Insurance Corp. will hold a public meeting today to propose eliminating the margin requirement. Other agencies, including the Federal Reserve and the Office of the Comptroller of the Currency, are also expected to recommend scrapping the rule, said the people who asked not to be named the proposal hasn’t been publicly disclosed. The FDIC announced last week that its board would meet Sept. 17 to vote on a swap margin proposal without providing any further details. The margin demand, implemented in 2015, has tied up $39.4 billion, according to industry estimates. That’s prompted major swap dealers, such as Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc., to make the rule’s elimination a lobbying priority. It would likely be months before regulators scrap the margin requirement. That’s because once the FDIC and other agencies issue their proposals, the public will have an opportunity to submit comments before a final rule could be put in place. ABI

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